Hodgson v. Canadian Newspapers Company Limited et al. [Indexed as: Hodgson v. Canadian Newspapers Co.]

49 O.R. (3d) 161

[2000] O.J. No. 2293

No. C30314

Court of Appeal for Ontario

McMurtry C.J.O., Goudge and Sharpe JJ.A.

June 22, 2000

*Application for leave to appeal to the Supreme Court of

Canada dismissed with costs May 3, 2001 (Gonthier, Major and

Binnie JJ.). S.C.C. File No. 28136. S.C.C. Bulletin, 2001,

p. 823.

Torts -- Defamation -- Defences -- Justification -- Qualified privilege -- Fair comment -- Malice -- Defendants publishing series of newspaper articles defaming plaintiff -- Justification not established -- Malice barring defences of qualified privilege and fair comment -- Malice established by finding that journalist's purpose not to report facts but rather to create sensational story without regard for facts.

Torts -- Defamation -- Defences -- Qualified privilege -- Fair comment -- Malice -- Defendant accused of malice should be permitted to give evidence of state of mind -- Evidence of what defendant intended relevant to issue of malice although not relevant to issue of meaning of language used.

Torts -- Defamation -- Damages -- Special damages -- General damages -- Aggravated damages -- Punitive damages -- Relationship between special and general damages -- Defendants publishing series of newspaper articles defaming plaintiff -- Appropriate to consider amount of special damages when determining quantum of general damages -- Basic principle that damages should be based upon rational attempt to measure in money terms loss and injury plaintiff has suffered -- Quantum of special and general damages making punitive damages inappropriate.

Damages -- Defamation -- Special damages -- General damages -- Aggravated damages -- Punitive damages -- Relationship between special and general damages -- Defendants publishing series of newspaper articles defaming plaintiff -- Appropriate to consider amount of special damages when determining quantum of general damages -- Basic principle that damages should be based upon a rational attempt to measure in money terms the loss and injury the plaintiff has suffered -- Quantum of special and general damages making punitive damages inappropriate.

In 1991, in a series of newspaper articles written by F, The Globe & Mail published a story reporting that H, the Engineering Commissioner of York Region, had recommended to the Region the purchase of lands from D, a developer, who was said to be a long-time friend of H, without disclosing to the Region that it was entitled to acquire the lands at no cost. H sued for defamation and, after a 78-day trial, Lane J. awarded H $800,000 for special, general, and punitive damages.

The Globe & Mail appealed and H cross-appealed. On the appeal, The Globe & Mail conceded that a reader could infer the defamatory meanings found by Lane J., but The Globe & Mail submitted that Lane J. had erred in rejecting its defences of justification, fair comment and qualified privilege in finding that F had acted with express malice and in the assessment of damages.

For the purposes of the appeal, the facts were that in 1989, the Region approved, subject to conditions, a plan of subdivision for a development corporation controlled by D. Condition 18 was that the developer provide lands for the construction of a grade separation. Condition 23 was that lands in Block 148 be dedicated for a road widening and for daylighting triangles. Condition 24 was that a 0.3-metre reserve be conveyed without monetary consideration. It was H's understanding and, as found by Lane J., his honest belief that, with these conditions, the Region would have to pay for the grade separation lands and he negotiated a price of $783,650 with the developer. Although H denied it at trial, Lane J. found that before recommending this purchase to the Region, H had received a memorandum from I, a subordinate in his department, suggesting that the matter of whether there should be any payment should be clarified. After the Region approved the purchase, O, the regional solicitor became aware of Condition 23 and he refused to clear the subdivision conditions. An experienced municipal law expert was retained and he opined that the Region was bound to go through with the purchase and that, while Condition 24 referred to a conveyance without monetary consideration, Conditions 18 and 23 referred to lands being provided or dedicated and this should not be taken necessarily to refer to a gift without charge. In October 1990, the lands were acquired by the payment of a grant. Next year, in mid-March, O learned of the I memorandum and he brought it to the attention of the Regional Chairman. O accused H of deliberately misinforming the Region. The matter came to the attention of F and the newspaper stories followed. Ultimately, the Region decided to dismiss H. The events had a devastating effect on H.

Held, the award of punitive damages should be set aside but the appeal should otherwise be dismissed; the cross-appeal should be dismissed.

It was the argument of The Globe & Mail that in rejecting its defence of justification made out on the facts, Lane J. had erred in concluding that the subdivision conditions did not require the developer to convey the lands for free and that this conclusion tainted his finding that the respondent had an honest belief that the region had to pay. While there was considerable force to the argument that Condition 23 did require the lands to be conveyed for free, it was not shown that Lane J.'s interpretation was wrong. The weakness in The Globe & Mail's argument was that the language of Condition 23 had to be read together with the other conditions. In any event, there was no basis to interfere with the finding that H had an honest belief that the Region had to pay for the lands. Accordingly, there was no error in rejecting the defence of justification.

On the issue of express malice, there was ample evidence to support the finding that F's purpose was not to report the facts, but rather to create a sensational story without regard for the facts and that he wrote the stories with an improper motive or purpose. This finding of malice was fatal to the defences of fair comment and qualified privilege, and it was not necessary to consider whether, but for malice, those defences were made out or whether they should be extended in light of the House of Lords' decision in Reynolds v. Times Newspapers Ltd. and the High Court of Australia's decision in Lange v. Australian Broadcasting Corporation. However, Lane J. erred in finding F guilty of malice on the ground that F did not believe the truth of what he had written. This finding should not have been made because Lane J. had ruled that F could not give evidence of what meaning he intended to convey. This ruling unfairly deprived F of the opportunity to explain his state of mind and, while his intentions were not relevant to the determination of the meaning of his words, evidence of his intentions was relevant and could properly be taken into account for the purpose of ascertaining what was the dominant motive operating on his mind. However, Lane J.'s finding of malice about F's intention to create a sensational story was not infected by this error.

Turning to the issues about the assessment of damages, there was evidence to support the finding that there was a sufficient causal link between the defamatory articles and H's loss of employment and Lane J.'s findings supported his award of special damages. As for the award of general damages, although Lane J. did not make a distinct award of aggravated damages, which are compensatory damages that take into account the additional harm caused to the plaintiff's feelings by the defendant's outrageous and malicious conduct, he listed a number of factors that warranted a substantial general damages award. It was not an error to take into account F's malice and the devastating effect of the libel. There was no error in principle in taking these aggravating factors into account. The award of punitive damages, however, was inappropriate and should be set aside. They were not required to achieve the goal of punishment and deterrence in view of the other damages awarded.

As for the cross-appeal, contrary to the submission of H, Lane J. made no error in taking into account his award of special damages when assessing the level of general damages. Indeed, but for the strictures on review of the quantum of a defamation award, this would be a case for reducing rather than increasing the damages awarded in light of the special damages. To avoid the risk of escalating and excessive awards, the basic principle should be kept in mind that libel damage awards, like damage awards for other wrongs, should be based upon a rational attempt to measure in money terms the loss and injury the plaintiff has suffered. Finally, there was nothing in the conduct of the appeal that justified an increase in H's damages.

Accordingly, the appeal should be allowed only to the extent of setting aside the award of punitive damages and the cross- appeal should be dismissed. In the circumstances, the parties should bear their own costs of the appeal.

APPEAL from a judgment of Lane J. (1998), 1998 14820 (ON SC), 39 O.R. (3d) 235 (Gen. Div.) for the plaintiff in an action for defamation.

Cases referred to Botiuk v. Toronto Free Press Publications Ltd., 1995 60 (SCC), [1995] 3 S.C.R. 3, 126 D.L.R. (4th) 609, 186 N.R. 1, 26 C.C.L.T. (2d) 109 (sub nom. Botiuk v. Bardyn); Brown v. Cole (1998), 1998 6471 (BC CA), 61 B.C.L.R. (3d) 1, 186 B.C.A.C. 73, [1999] 7 W.W.R. 703 (B.C.C.A.); Delta (Municipality) v. Trim (1982), 1982 681 (BC SC), 41 B.C.L.R. 58, 20 M.P.L.R. 208 (S.C.); Fraser v. Mirza, [1993] S.L.T. 527 (H.L.); Hill v. Church of Scientology of Toronto, 1995 59 (SCC), [1995] 2 S.C.R. 1130, 24 O.R. (3d) 865n, 126 D.L.R. (4th) 129, 184 N.R. 1, 30 C.R.R. (2d) 189, 25 C.C.L.T. (2d) 89; John v. MGN Ltd., [1996] 2 All E.R. 35 (C.A.); Lange v. Australian Broadcasting Corporation, [1997] 189 C.L.R. 520 (Aust. H.C.); Ley v. Hamilton (1935), 153 L.T. 384 (H.L.); McCarey v. Associated Newspapers (No. 2), [1964] 3 All E.R. 947, [1965] 2 Q.B. 86, [1965] 2 W.L.R. 45, 108 Sol. Jo. 916 (C.A.); Mills v. York (Regional Municipality) Land Division Committee (1976), 1975 633 (ON SC), 9 O.R. (2d) 349, 60 D.L.R. (3d) 405 (Div. Ct.); Minto Construction Ltd. v. Ottawa-Carleton (Regional Municipality) (1976), 6 O.M.B.R. 234; Pizza Pizza Ltd. v. Toronto Star Newspapers Ltd. (1998), 1998 18866 (ON CA), 42 O.R. (3d) 36, 167 D.L.R. (4th) 748, 28 C.P.C. (4th) 90 (Div. Ct.), affd (2000), 2000 4301 (ON CA), 49 O.R. (3d) 254 post, [2000] O.J. No. 28 (C.A.); Reynolds v. Times Newspapers Ltd., [1999] 4 All E.R. 609 (H.L.); Village Shopping Plaza (Waterdown) Ltd. v. Hamilton-Wentworth (Regional Municipality) (1981), 1981 2951 (ON SCDC), 34 O.R. (2d) 311, 127 D.L.R. (3d) 354, 16 M.P.L.R. 139, 16 M.P.L.R. 139 (Div. Ct.); Walker v. CFTO Ltd. (1987), 1987 126 (ON CA), 59 O.R. (2d) 104, 37 D.L.R. (4th) 224, 39 C.C.L.T. 121 (C.A.) Statutes referred to Municipal Act, R.S.O. 1990, c. M.45 Planning Act, R.S.O. 1990, c. P.13, s. 51(5) Authorities referred to Black's Law Dictionary, 7th ed. (St. Paul, Minn.: West Publishing Co., 1999), "dedication" Brown, The Law of Defamation, 2nd ed. (looseleaf, updated 1999) (Toronto: Carswell, 1994), pp. 16-18, 16-19 Rogers, Canadian Law of Planning and Zoning, looseleaf (updated 1999) (Toronto: Carswell, 1988), pp. 114.29, 114.32

Patricia D.S. Jackson and Timothy B. Trembley, for appellants. Philip P. Healey, for respondent.

The judgment of the court was delivered by

SHARPE J.A.: --

OVERVIEW

[1] On March 22, 1991, The Globe and Mail (the appellant) published a front-page story reporting on the purchase of certain lands from a developer by the Region of York. The Region paid a substantial sum for the lands. The story stated that the respondent, the Engineering Commissioner of York Region, had recommended the purchase, but that planning documents indicated that the Region was entitled to acquire the lands at no cost and that the respondent had not disclosed that fact to the Regional Council. It was also reported that the developer who received the money was a long-time friend of the respondent. These allegations were repeated in several subsequent articles.

[2] The respondent brought this action for defamation. After a 78-day trial, Lane J., sitting without a jury, rejected the defences of justification, fair comment and qualified privilege and found that the appellant Jock Ferguson, the journalist who wrote the articles, had acted with express malice. The respondent was awarded $880,000 for special, general, and punitive damages.

[3] The appellants allege that the trial judge erred in finding that they had not proved justification and in rejecting their defences of fair comment and qualified privilege. The appellants also attack the trial judge's finding of malice. They submit that if they are liable, the trial judge erred with respect to damages. The respondent cross-appeals, contending that the damages should be increased, both because of errors made by the trial judge and because of the manner in which this appeal was conducted.

ISSUES

[4] The following issues are raised:

1. Did the trial judge err in finding that the appellants had failed to establish justification?

2. Did the trial judge err in finding that the appellant Ferguson was guilty of actual malice?

3. Did the trial judge err in rejecting the defence of fair comment?

4. Did the trial judge err in rejecting the defence of qualified privilege?

5. Did the trial judge err with respect to damages?

6. Should the damages be increased because of the conduct of the appeal?

FACTS

(a) The Article

[5] In view of its central importance, I set out here the complete text of the main article complained of. It appeared as the headline story on Friday, March 22, 1991, on the front page of The Globe and Mail.

Land bought by York Region should be free, files say

Council follows engineering commissioner's advice that compensation required for property to build overpass

By Jock Ferguson

TORONTO -- One of the largest real estate developers in the Toronto area was given $783,500 by the Region of York for land that regional planning documents say the municipality should have received free.

The payment to a company owned by Alfredo DeGasperis was arranged by Robert Hodgson, York Region's commissioner of engineering.

Mr. Hodgson advised the regional council last Oct. 10 that it had to pay for 1.55 hectares the region needed for the construction of an overpass on 16th Avenue, east of Yonge Street, over the CN Rail line in Richmond Hill, north of Toronto.

The council approved the payment based on his advice.

However, The Globe and Mail has learned that Mr. Hodgson did not bring forward information in his possession indicating that the land could have been obtained at no cost.

He had been advised by his deputy, John Ireland, in a hand- written memorandum on Oct. 1, 1990, that the land on 16th Avenue was to be conveyed to the region at no cost as part of a subdivision agreement signed in May, 1989, between the Town of Richmond Hill and Mr. DeGasperis's company. A total of 306 homes are to be built in the 20.25-hectare subdivision.

"There was an assumption on my part that council knew of the subdivision agreement," Mr. Hodgson said in an interview yesterday. "There was never any intent on my part to mislead council in this matter."

He said the wording of the DeGasperis subdivision agreement does not specifically say the land for the overpass had to be given to the region at no cost.

He said it is his position that the developer had to hand over only the eight-metre right-of-way that is normally given to municipalities free. And he added that the negotiated price saved the region $600,000 from market value.

Regional solicitor Edward Oakes said in a March 20 letter to Regional Chairman Eldred King that Mr. Hodgson's action "was an informed, deliberate decision . . . and not the result of inadvertence."

The council and senior staff reviewed the controversial purchase in January and February, when the region's legal department learned of the subdivision agreement from the planning department and questioned whether any payment should be made.

Mr. Hodgson told the council that it was common practice to pay for such land acquisitions, but the legal department found that in two recent cases significantly larger road allowances -- 2.55 hectares on Bathurst Street and 3.15 hectares on Rutherford Road and Keele Street -- were obtained from other developers at no cost.

The region regularly obtains strips of land at no cost from developers for road widening.

The regional council voted in late February to go ahead with the payment after it obtained an outside legal opinion saying its Oct. 10 decision was a binding contract.

The money was paid in early March.

The Ireland memorandum was discovered on Wednesday by senior regional staff in gathering documents for a Globe reporter who had filed a request under the Ontario Freedom of Information Act to see all documents pertaining to the overpass land deal.

Senior regional staff called in Ontario Provincial Police the same day because they suspected that documents relating to the deal may be missing from the engineering department files.

The OPP seized 1,260 pages of documents from York Region's offices in Newmarket on Wednesday and are investigating the deal. The documents were made available to The Globe yesterday in the offices of the OPP's anti-rackets squad to comply with the request made under the Freedom of Information Act.

Members of York Regional Council are now questioning why Mr. Hodgson personally handled the negotiations to purchase the land in meetings with Mr. DeGasperis and one of his executives when the responsibility for land acquisitions was specifically delegated by the council to Mr. Ireland.

In a detailed examination of relations between municipal politicians, senior staff and real estate developers in York Region in 1988, The Globe found that Mr. Hodgson is a long- time friend of Mr. DeGasperis.

The engineering commissioner is a powerful figure in the fast-growing York Region because he personally controls information about the capacity in the giant York-Durham sewer system, a key component of all real-estate development in the area. No development can occur without access to the sewer system.

Mr. DeGasperis is the largest sewer contractor in Canada and, with partners Marco Muzzo and Rudolph Bratty, owns or has developed close to 10,000 hectares of land around Toronto, much of it in York Region.

The engineering department files made available to The Globe yesterday in the offices of the OPP show that Mr. DeGasperis and Mr. Hodgson met in March, 1990, and that "Mr. Hodgson was not averse to paying" for the land needed for the overpass. A further meeting between the two occurred in June in an attempt to reach a final agreement on the amount to be paid.

The decision to pay for the land may cost the region a great deal more money. Another developer who gave up land free to the region has told the council that he wants to reopen his agreement so that he can be treated in the same fashion as Mr. DeGasperis.

[6] This article was followed by a number of subsequent articles over the next several months in which essentially the same statements were repeated. Except for the purposes of damage assessment, the trial focused almost exclusively on the first article as did the arguments of the parties before this court.

[7] In his reasons, reported at (1998), 1998 14820 (ON SC), 39 O.R. (3d) 235, the trial judge found that the plain and obvious meaning of the articles was defamatory. He stated at p. 257:

In summary, the plain and obvious meaning of these articles is devastatingly defamatory: Robert Hodgson, Commissioner of Engineering, aware that the Region had the right to acquire the lands free, did not disclose that fact to Council when advising it to pay his friend DeGasperis $783,000 for that land, despite being reminded by his deputy that the land was to come at no cost under the subdivision agreement. Despite Mr. Hodgson's denials, the Regional solicitor reported to the Regional Chairman that the plaintiff did it deliberately. In "arranging" this payment, the plaintiff was acting in an area of responsibility allocated to another officer. His defence that it was common practice to pay in such situations was found to be contradicted by examples uncovered by the legal department.

[8] The trial judge also found the following defamatory false innuendoes which were not justified: (a) that the respondent was not fit to be elected to the office of the Mayor of the Township of King; (b) that the respondent acted dishonestly; (c) that the respondent misconducted himself in his office and did not properly discharge his duties in respect thereof; (d) that the respondent deliberately misinformed representatives of his employer to its detriment and that of his community; (e) and that the respondent improperly used his position to serve the interest of DeGasperis to the detriment of the community.

(b) Background

[9] The trial was a lengthy one and the trial judge gave detailed reasons for judgment in which he made comprehensive factual findings. It is not necessary, for the purposes of this appeal, to review all aspects of this long and difficult case. In these reasons, I intend only to deal with the facts that have a direct bearing on the issues raised on appeal.

[10] In mid-1988, a developer, Metrus Management, a company controlled by Alfredo DeGasperis, applied to York Region for approval of a plan of subdivision. In accordance with the usual procedure, the application was circulated by the Region's Planning Department to other agencies, including the Engineering Department headed by the plaintiff, for comment. An issue of concern to the plaintiff and his department was the question of the lands required for road widening, "daylighting triangles", a 0.3-metre reserve, and the construction of an overpass over a CNR right-of way, referred to in the evidence as the "grade separation". The respondent recommended that the approval of the plan of subdivision on the following condition:

A condition of draft approval should require the road widening, daylighting triangles and 0.3 metre reserve, as shown in red on the attached plan, to be conveyed to the Region of York.

[11] The land shown in red on the plan is the entirety of what later came to be referred to as Block 148. Block 148 includes the lands required for road widening, daylighting triangles, the 0.3-metre reserve, and as well, the lands required for the grade separation. In April 1989, the Planning Committee recommended the following three conditions of subdivision approval with respect to the lands required by the Region for the above noted purposes:

18. The owner shall agree in the subdivision agreement to provide the necessary lands for the construction of a grade separation on Sixteenth Avenue (Y.R. 73) at the CNR right-of-way.

19. A widening, as represented by Block 148, together with the 15.0 meter by 15.0 metre daylighting triangles at the intersection of Street B and Sixteenth Avenue (Y.R. 73), as shown on the approved draft plan, shall be dedicated as public highway.

20. A reserve, 0.3 metres in width, adjacent to the widening referred to in Condition 23 and the hypotenuse of the daylighting triangle referred to in Condition 23, as shown on the approved draft plan, shall be conveyed to The Regional Municipality of York, without monetary consideration and free of all encumbrances.

[12] The Regional Council adopted the Planning Committee's recommendation without amendment, thereby approving the plan of subdivision, subject to the conditions being satisfied. The developer signed a subdivision agreement with the Town of Richmond Hill, a term of which required the developer to convey the lands in Block 148 free of cost. A central issue is whether it was intended or understood that the developer was required to convey the lands required for the grade separation free of cost. It was the respondent's position that it was understood that the Region would have to pay for these lands. Following Council approval, the respondent entered negotiations with the developer for the acquisition of the lands required for the grade separation. It should be noted at this point that the appellants did not attempt to support the statement in the article that the appellant was a "long-time friend" of DeGasperis. A more apt description of the relationship would be business acquaintance. After lengthy negoti ations, the respondent and the developer agreed on a price of $783,650. The respondent recommended to Council acquisition of the lands for that price, and on October 10, 1990, Council accepted the respondent's recommendation and approved the purchase. In making his recommendation to Council, the respondent made no reference to Condition 23 or to the fact that the lands were being acquired in connection with a proposed plan of subdivision.

[13] Before the recommended purchase was submitted to Council, a subordinate in the respondent's department, John Ireland, raised with the respondent the question of whether Condition 23 could not be interpreted as entitling the Region to require conveyance of the lands for the grade separation at no cost. Ireland thought that the matter should be disclosed to the Council. On October 1, 1990, shortly before the matter was put before Council, Ireland sent the respondent the memorandum referred to in the article. It reads as follows:

Bob Hodgson

19T-88062 (Dovestone/Wedgeveld)

Regional Engineering Commissioner's letters of Nov. 8/88 and March 30/89 request "the road widening....as shown in red on the attached plan, to be conveyed to the Region free of all costs...."

(We showed the entire widening in red, including grade separation requirements).

See Regional Council Conditions 2, 18, 23, 49, 50:

18 -- "The owner shall agree in the subdivision agreement to provide the necessary lands for the construction of a grade separation on Sixteenth Avenue (Y.. 73) at the CNR right-of- way."

23 -- "A widening, as represented by Block 148, ....as shown on the approved draft plan, shall be dedicated as public highway."

(Block 148 is 1.482 hectares = 3.6620 acres. The first 8 metres of widening accounts for approx. 1.1329 acres of this.)

Planning Dept. advises that the above wording of Condition 23 is standard for a request for widening such as was contained in our Nov. 8/88 and March 30/89 letters.

Our letters of Nov. 8/88 and March 30/89 indicate that it was our intention originally that Block 148 be conveyed to the Region for free. Given this fact and Regional Council's Condition #23, the matter should be perhaps clarified with Engineering Committee and Council before any of Block 148 is paid for (particularly given the sum involved -- almost $800,000). Also, without such clarification the Regional Solicitor may have difficulty clearing Condition #23 or executing a purchase agreement.

John Ireland

October 1st, 1990

[14] The respondent testified that he did not see this memorandum at the time, but the trial judge rejected his evidence on the point and found that he did receive the memorandum before the matter went before the Council.

[15] As noted by the trial judge, there was serious conflict between the respondent and the Regional Solicitor, Edward Oakes. After Council approved the purchase on October 10, Oakes became aware of Condition 23. He refused to clear the conditions of subdivision approval on the basis that he had conflicting instructions from Council, namely Condition 23, requiring the lands to be given for free, and the decision of October 10, 1990 to purchase the land for $783,650. Council retained an experienced municipal law expert, Mr. George Rust D'Eye, to provide it with an opinion as to whether the October 10, 1990 resolution required it to pay DeGasperis or whether it could enforce the provision in the Richmond Hill subdivision agreement which required the developer to provide the land free of cost. Mr. Rust D'Eye's opinion was that the Region was contractually bound to go through with the purchase of the lands. Although he was asked to give an opinion on the effect of the October 10, 1990 resolution and was not specifically asked for his opinion as to the legal effect of Condition 23, in his letter to the Region, Mr. Rust D'Eye stated as follows:

It is noted that whereas condition 24 refers to a conveyance "without monetary consideration and free of all encumbrances", Conditions 18 and 23 merely speak of the owner as agreeing to provide the lands, and that lands be dedicated as public highway, respectively. In this sense, "dedicated" should not be taken necessarily to refer to a gift, without charge, but to the giving over of property for use as a road.

[16] On the basis of the Rust D'Eye opinion, the Regional Council approved payment to the developer, but did so by rescinding its decision of October 10, 1990, and paying the developer a grant. This was done to avoid setting a precedent of paying a developer for land sought to be acquired as a condition of subdivision approval.

[17] In mid-March 1991, Oakes learned of the existence of the Ireland memorandum. He confronted the respondent, who denied receiving the memorandum at the time of Council's October 1990 deliberations. The original of the memo was missing from the relevant file in the clerk's department. A search turned up a copy of the document a few days later and it was turned over to the Regional Solicitor.

[18] On March 20, 1991, Oakes wrote to the Regional Chairman Eldred King, accusing the respondent of having deliberately misinformed Council as to the existence of Condition 23. Oakes accused the respondent of lying about the memorandum and advised that the legal department could no longer work with the respondent on property acquisition matters. Oakes' letter led the Regional Chairman to contact the Ontario Provincial Police to investigate the missing memorandum. The article in The Globe and Mail followed on March 22.

[19] Immediately upon publication of the article, Chairman King called a special meeting of Council to discuss the respondent's situation. Legal counsel was retained for an opinion on the dismissal of the respondent. While the trial judge found that the legal counsel was not given all the facts, they advised that, the respondent could be dismissed. They reasoned that absent some credible explanation from the respondent, his failure to disclose that the lands in question were subject to a condition of subdivision approval and his failure to honestly and openly acknowledge the existence of a memorandum which could have impacted on the Council's decision, could provide the basis for a fundamental loss of trust that would justify dismissal.

[20] King attempted to negotiate a termination settlement with the respondent. The respondent refused to resign and requested a hearing under the Municipal Act, R.S.O. 1990, c. M.45. Prior to the hearing, the respondent's solicitor examined Ireland on the issue of whether he gave the memo to the plaintiff. The respondent provided Council with detailed written submissions, and an affidavit in which he swore that he did not receive the Ireland memo before January 1991. An all- day hearing was held on April 25, 1991. In addition to the respondent's affidavit, there were affidavits from Ireland, Oakes and others, as well as a report prepared by legal counsel. Ireland swore that the respondent did have his memo before the October 10, 1990 Council meeting. Members of Council and the plaintiff's solicitor asked questions of Oakes, Ireland, and the other deponents.

[21] The respondent took the position before Council that Ireland's evidence, should not be believed. The respondent maintained that position at trial. Ireland was subjected to a vigorous cross-examination and was accused of lying and forgery. As already noted, the trial judge accepted his evidence and found that the respondent had received the memorandum prior to the October 10, 1990 meeting.

[22] After the hearing, Council decided, by a vote of 15-3, to dismiss the plaintiff. Council did not, however, make any finding of wrong-doing, but rather paid the respondent a severance allowance of $214,000 representing 18 months' salary.

[23] The only Councillor who voted on the termination resolution who testified at trial was Councillor John West. West provided the following explanation for his decision to vote in favour of dismissing the plaintiff:

Well, I think there was really, basically, two or three things which made my mind up when I -- when I came to vote, there would have been three things which made my decision or helped make my decision. Number one was that it didn't matter to me whether it was deliberate or accidental, regarding the land. The fact was that there was a cost. And I think Bob [Hodgson], unfortunately, had let me down personally and the committee and the council.

Number two, I was a little bit disturbed that the blame was being shifted to Mr. Ireland. I had a great respect -- I must be very frank with you, I like Bob. I really had a very good rapport with him. We argued, we fought, but then I did that all the time with everybody, but I did have a good rapport with John [Ireland], as well. And I don't know. John is one person who, he's actually a strange person. He's one person I don't think would tell a lie. I don't know why, but I found him a very forthright person. And those two things together made my third decision -- actually, it wasn't an easy decision. You know, firing somebody in my opinion is not an easy decision. But those two things made my third decision fairly easy, that I felt that those two combined was the thing.

And the third one which compounded the two together was that I had lost faith in him. So it was really three items which made my decision in the end for the dismissal of Bob.

[24] The trial judge found that these events had a devastating effect on the respondent. The allegations made in the first article were repeated several times in subsequent articles in The Globe and Mail, and similar stories appeared in other newspapers. The respondent was shunned socially and professionally and was unable to find work as a planning consultant. He decided to run for Mayor in order to clear his name but again, The Globe and Mail repeated the libel.

ANALYSIS

Issue 1: Did the trial judge err in finding that the appellants had failed to establish justification?

[25] The appellants challenge the trial judge's findings as to the meaning of the article in their notice of appeal, but the point was not pressed in either their factum or oral submissions. The appellants conceded before this court that a reader could infer the meaning found by the trial judge. They say, however, that it would be a matter of inference and opinion for a reader to interpret the articles as conveying that meaning. The position of the appellants is that the essential facts stated in the article are true, that the defence of justification is made out with respect to the facts, and that the inferences a reader might draw are covered by the defences of fair comment and qualified privilege.

[26] The trial judge found that the conditions of subdivision approval did not require the developer to convey the lands for free. The trial judge also found that, in any event, the respondent had an honest belief that the Region had to pay for the lands. The trial judge accepted the respondent's evidence on his understanding of the meaning of Condition 23. The respondent did not believe that Condition 23 entitled the Region to obtain all of the lands in Block 148 without payment. Rather, he read Condition 23 together with Conditions 18 and 24, in the light of what he believed to be accepted planning practice. The respondent testified that in his mind, there was a clear distinction between lands required for road widening, daylighting triangles and a 0.3-metre reserve and the lands required for the grade separation. The respondent testified that the former fell into the category of lands that a municipality would ordinarily expect to receive for free as a condition of subdivision approval, while the latter fell into the category of lands for which a municipality would be expected to pay. As the respondent did not believe there was any question but that the Region had to pay for the lands required for the grade separation, he did not bring the terms of Condition 23 to Council's attention when recommending acquisition at the price he had negotiated with Metrus. The trial judge accepted the respondent's evidence on these points and agreed with the respondent's interpretation of Condition 23.

[27] The key point, in the submission of the appellants, is that the trial judge erred in interpreting the conditions of subdivision approval. The appellants contend that, properly interpreted, the conditions of subdivision approval did require the developer to convey the lands for free. They say that the trial judge's finding to the contrary was a fundamental error that tainted his related finding that the respondent had an honest belief that the region had to pay for the lands.

[28] The appellants rely on a number of points that lend considerable force to the argument that Condition 23 did require the lands to be conveyed for free. We were referred to several authorities that suggest that in planning law, the word "dedicate" ordinarily means to give or transfer without charge. Rogers, Canadian Law of Planning and Zoning (looseleaf, updated 1999), at p. 114.29, states that the purpose of the Planning Act, R.S.O. 1990, c. P.13, s. 51(5), authorizing the imposition as a term of subdivision approval that lands be "dedicated", is to enable municipalities "to compel a subdivider to donate without compensation land not only for highways but for other public purposes." Blacks' Law Dictionary, 7th ed. (St. Paul, Minnesota: West Publishing Co., 1999), at p. 421 defines the word "dedication" in relation to property as "the donation of land or the creation of an easement for public use", and Rogers, supra, at p. 114.32(l) states that the words "dedicate" and "donate" have been used interchangeably. Although the point never seems to have been decided explicitly, courts have assumed that dedicate is an equivalent for convey free of charge: see Village Shopping Plaza (Waterdown) Ltd. v. Hamilton-Wentworth (Regional Municipality) (1981), 1981 1612 (ON SC), 34 O.R. (2d) 311 at p. 314, 127 D.L.R. (3d) 354 (Div. Ct.); and Delta (Municipality) v. Trim (1982), 1982 681 (BC SC), 20 M.P.L.R. 208 at p. 211, 41 B.C.L.R. 58 (S.C.). The appellants also submit that the grade allowance was sufficiently related to the subdivision to allow the imposition of a term that the lands required be conveyed without charge: see Minto Construction Ltd. v. Ottawa-Carleton (Regional Municipality) (1976), 6 O.M.B.R. 234 at p. 237; Mills v. York (Regional Municipality) Land Division Committee (1976), 1975 633 (ON SC), 9 O.R. (2d) 349 at pp. 352-53, 60 D.L.R. (3d) 405 (Div. Ct.). The appellants place heavy reliance on the evidence of Councilor John West, who had extensive experience in the Region. The trial judge did not refer to his evidence. West testified that:

. . . dedicated simply means it's being given free. It was the standard thing when developers would dedicate a piece of land . . . I'm not a lawyer but when somebody tells me it is dedicated, it means free. . . . for 22 years I dealt with developers -- in all the 22 years I've never heard dedicated to the town or to the municipality meant that we had to pay for it.

[29] The appellants also point out that Condition 23 came about as a direct result of the respondent's own recommendation that the developer be required to convey the lands in Block 148 "free of all costs and encumbrances". Another point is that the developer did sign a subdivision agreement with the Town of Richmond Hill that clearly required Block 148 to be conveyed without charge.

[30] While the interpretation of Condition 23 is not crystal clear, I am not persuaded that the trial judge erred in his interpretation. The weakness in the appellants' argument is that it takes Condition 23 and the word "dedicate" as if they stood on their own, in isolation and out of context. In my view, the language of Condition 23 has to be read together with the Conditions 18 and 24. Condition 18 specifically refers to the lands required for the grade separation but does not say that the lands are to be provided at no cost. Condition 24 refers to other lands, excluding those required for the grade separation, and requires that they be conveyed "without monetary compensation". It seems to me that read together with Conditions 18 and 24, Condition 23 is at least ambiguous and that the trial judge was entitled to take into account extrinsic evidence that strongly supported the respondent's interpretation. While the evidence showed that the Region had often used "dedicate" to mean free of charge, the Region had never before required the transfer of land for a grade separation as a condition of subdivision approval. There was considerable evidence led by the respondent that others who were involved in the process and who were knowledgeable in planning matters shared the respondent's view that established planning practice simply would not support requiring conveyance of these lands at no cost.

[31] The trial judge also found that even if Condition 23 did impose a legal obligation on the developer to convey the grade separation lands at no cost, he was satisfied that the respondent had an honest belief that the Region had to pay for the lands. In my view, there is no basis for this court to interfere with that finding. I hardly need point out that the trial judge was well placed to assess the credibility of the respondent. In addition to the ambiguity of Condition 23 and the other points already mentioned, there was ample evidence to support the finding. The respondent conducted his negotiations with the developer openly and other planning officials readily accepted that the Region would have to pay for the lands. While John Ireland suggested that it would be advisable to lay the whole matter before the Council, in his evidence at trial he agreed with the respondent's interpretation of Condition 23. Other witnesses in the employ of the Region were similarly of the view that the Region had to pay f or these lands. Even Oakes and King, who were found by the trial judge to be antagonist to the respondent, conceded that the matter was at best ambiguous.

[32] Accordingly, I do not agree that the trial judge erred in rejecting the defence of justification.

Issue 2: Did the trial judge err in finding that the appellant Ferguson was guilty of actual malice?

[33] The issue of malice is relevant to both the defences of fair comment and qualified privilege and to the assessment of damages. In Hill v. Church of Scientology of Toronto, 1995 59 (SCC), [1995] 2 S.C.R. 1130 at p. 1189, 126 D.L.R. (4th) 129, Cory J. described malice in the following terms:

Malice is commonly understood, in the popular sense, as spite or ill-will. However, it also includes . . . "any indirect motive or ulterior purpose" that conflicts with the sense of duty or the mutual interest which the occasion created . . . . Malice may also be established by showing that the defendant spoke dishonestly, or in knowing or reckless disregard for the truth.

[34] Similarly, in Botiuk v. Toronto Free Press Publications Ltd., 1995 60 (SCC), [1995] 3 S.C.R. 3 at p. 29, 126 D.L.R. (4th) 609 at p. 627, Cory J. stated:

Malice is commonly understood as ill will toward someone, but it 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.

[35] Malice, then, relates to the state of mind of the defendant. As it is usually difficult to prove spite or ill- will, malice is ordinarily established through proof that the defendant knew that the statement complained of was untrue, was reckless with respect to its truth or that the defendant had some improper motive or purpose. It has also been held that malice is shown where the defendant did not believe the truth of the statements published: see Brown, The Law of Defamation, 2nd ed. (looseleaf, updated 1999) (Toronto: Carswell, 1994), at pp. 16-18 and 16-19.

[36] The trial judge found that the appellant Ferguson was guilty of malice for two reasons. First, the trial judge found that Ferguson did not believe the truth of what he had written. Second, the trial judge found that Ferguson had written the articles complained of with an improper motive or purpose. For the reasons that follow, it is my view that the trial judge erred in making a finding of malice on the first ground, but that his finding on the second ground should be upheld.

[37] During his examination in chief, Ferguson was asked whether he meant the meanings imputed to the articles pleaded by the respondent, namely that the respondent had misconducted himself in his office, failed to perform his duties, acted dishonestly, or had improperly close relations with land developers. He began to answer that he did not mean to convey those meanings when objection was taken to the line of questioning. The trial judge ruled that evidence of what Ferguson intended was inadmissible but that Ferguson could be asked if he had any belief in the imputed meanings. The transcript does not record any reasons for this ruling. However, in his reason for judgment, the trial judge referred to the rule that in determining the natural and ordinary meaning of the words, no evidence is admissible. He stated, at p. 253, that it is for the trier of fact to determine:

. . . the sense in which the words would reasonably have been understood by an ordinary man in the light of generally known facts. The intention of the author and publisher is not relevant on the issue of meaning. Accordingly, I do not consider the evidence in that respect elicited from the author, Ferguson, on this branch of the case.

(Emphasis added)

[38] This would appear to be the basis for the ruling limiting what Ferguson could say as to what he meant when writing the articles. Following the ruling, Ferguson was asked whether he believed the truth of pleaded imputed meanings. He answered that he did not. The trial judge based his finding of actual malice, in part, on Ferguson's evidence that he had no belief in the truth of the statements pleaded by the respondent.

[39] In my view, the trial judge should not have made a finding of malice on this basis. The appellant Ferguson was effectively precluded from offering a full explanation of his state of mind when he wrote the articles. The ruling restricting the evidence that could be led with respect to intended meaning effectively precluded Ferguson from fully answering the respondent's allegation of malice. As Ferguson's trial counsel noted when he was attempting to lead the evidence, "this is like having both hands tied".

[40] Where a defendant is faced with an allegation of express malice, it is unfair to deny the defendant a full opportunity to explain his or her state of mind. I fail to see how it is possible to establish a subjective state of mind if the defendant is precluded from explaining what he or she meant when writing the allegedly defamatory words. This is exactly what happened to Ferguson. Because he was not permitted to speak as to the story's meaning, he could not fully testify as to his honest belief or otherwise explain his state of mind. The result, in my respectful view, is that the trial judge made a finding as to the reporter's state of mind having deprived him of an opportunity to explain his state of mind.

[41] I do not question the rule relied on by the trial judge with respect to the issue of imputed meanings. On that issue, the authorities hold that extrinsic evidence, including the intention of the author and the understanding of the plaintiff, is not relevant: see Brown, supra, pp. 5-65 to 5-70. The difficulty is with the application of that rule to the very different issue of malice. Evidence may be inadmissible and irrelevant on one issue, but admissible and relevant on another.

[42] While the question appears not to have been the subject of extensive discussion in the case law, there is support for the proposition that evidence of the author's intended meaning is admissible and relevant to the issue of malice. In Fraser v. Mirza, [1993] S.L.T. 527 (H.L.), the issue was whether the pursuer was entitled to rely on evidence of the defendant's intended meaning in establishing malice. It was argued by counsel, at p. 530, that "while an allegedly defamatory statement falls to be construed objectively by reference to the ordinary and natural meaning of the words, the question whether it was made maliciously depends upon the ascertainment of the subjective state of mind of the maker of the statement at the time it was made." The House of Lords accepted the argument and held, at p. 531, that the defendant's "intentions in respect of what he was trying to convey by the letter are properly taken into account for the purpose of ascertaining what was the dominant motive operating on his mind at the time he wrote it." If it is open to a plaintiff to rely on the defendant's intended meaning to establish malice, it must equally be open to the defendant to adduce evidence of his or her intended meaning to meet an allegation of malice.

[43] An analogy may be drawn here to the rule that allows a defendant to plead and justify a different meaning: see Pizza Pizza Ltd. v. Toronto Star Newspapers Ltd. (1998), 1998 18866 (ON CA), 42 O.R. (3d) 36, 167 D.L.R. (4th) 748 (Div. Ct.), affirmed (2000), 2000 4301 (ON CA), 49 O.R. (3d) 254 post, [2000] O.J. No. 228 (C.A.). As I stated at p. 44:

The defendant who does not accept the meaning pleaded by the plaintiff cannot, as a practical or tactical matter, simply deny that meaning. Such a denial would ring hollow if the defendant did not offer a different meaning. Where, as in the present case, the defendant asserts a different but also defamatory meaning, its position becomes scarcely tenable before the trier of fact if it is precluded from pleading the truth of that meaning.

(Emphasis added)

[44] I conclude, therefore, that the trial judge erred by basing his finding of express malice on the basis of Ferguson's evidence that he did not believe the truth of the imputed meanings pleaded by the respondent having denied Ferguson the opportunity to explain what he did mean.

[45] However, the trial judge also found malice on other grounds "quite apart from Mr. Ferguson's own belief or lack of belief". There was ample evidence to support the trial judge's finding that Ferguson's purpose was not to report the facts but rather to create a sensational story. The trial judge made extensive adverse findings as to Ferguson's conduct in writing the story. Among the findings supporting malice were the following. First, Ferguson relied on Oakes as a source when he knew of the friction between Oakes and the respondent and knew Oakes to be partisan. Second, Ferguson knew of evidence that supported the position of the respondent, in particular the Rust D'Eye opinion, but suppressed it. Third, Ferguson failed to give Hodgson a fair chance to explain his side of the story in the first article and made no effort to present a balanced picture in the articles that followed. Fourth, the defendants did not even attempt to justify the statement that the respondent was "long-time friend" of DeGasper is, a statement that could only be read in the context as suggesting dishonesty on the part of the respondent. In the end, the trial judge's findings amount to this: Ferguson was, above all, intent on writing a sensational story and engaged in "systematic reporting of one side and non-reporting of the other." In view of the trial judge's detailed and explicit rejection of Ferguson as a credible witness and the high degree of deference the court must accord to finding of facts, I see no basis for interference with these findings. They provide an adequate foundation for a finding of malice, and they are not infected by the error I have identified with respect to Ferguson's intended meaning. The trial judge found that, whatever he meant to say, and whatever his belief, Ferguson was on a mission to write a sensational story without regard for the facts.

Issue 3: Did the trial judge err in rejecting the defence of fair comment?

Issue 4: Did the trial judge err in rejecting the defence of qualified privilege?

[46] In the face of the findings related to malice that I have just reviewed, I cannot accept the appellant's attempt to characterize the articles they published as an honest attempt to present the true facts on an important issue of public concern. The finding of malice is fatal to the defences of fair comment and qualified privilege, and I need not consider whether but for malice, those defences were made out. We were also invited to consider the expanded scope for the defence of qualified privilege established by the House of Lords in Reynolds v. Times Newspapers Ltd., [1999] 4 All E.R. 609 and by the High Court of Australia in Lange v. Australian Broadcasting Corporation, [1997] 189 C.L.R. 520. It is clear from both decisions that a finding of malice also excludes the expanded defence of qualified privilege. Accordingly, it is not necessary for us to express an opinion on whether or not the scope of the defence of qualified privilege should be expanded in Ontario.

Issue 5: Did the trial judge err with respect to damages?

(a) Special damages

[47] The trial judge found that the respondent was secure in his position as Commissioner of Engineering until the publication of the defamatory articles by the appellants. The trial judge found that the respondent's dismissal was caused by the appellants' defamatory articles and awarded damages accordingly. Special damages were calculated in the amount necessary to compensate the respondent for the loss of his position from the date of his dismissal to the date of his expected retirement, less the amount he received as a termination allowance from the Region and with a reduction for contingencies.

[48] No issue is taken with the calculation of the special damages in the amount of $380,000. The appellants submit, however, that the trial judge erred in law making any award for loss of income. The appellants say that the cause of the respondent's loss was the decision of the Regional Council to terminate the respondent, made after a full statutory hearing, held for the specific purpose of examining the respondent's conduct and with a view to determining whether he should be terminated as a result.

[49] The trial judge accepted the evidence of Chairman King, who attended the hearing but did not vote, that the reason for termination related to the land acquisition and to the failure of the respondent to give Council all the relevant facts. The appellants submit that having made this finding as to the reason for the plaintiff's termination, the trial judge erred in law in holding the defendants liable for the plaintiff's termination. The appellants rely on the evidence of Councillor West, not mentioned by the trial judge, that the plaintiff was terminated because he let Council and the Engineering Committee down, attempted to shift the blame to his subordinate, and that his conduct had led to a loss of faith.

[50] In my view, there was evidence to support the trial judge's finding that there was a sufficient causal link between the defamatory articles and the respondent's termination to justify an award of damages. The controversy about the respondent's non-disclosure of Condition 23 and the fact that the purchase involved lands governed by conditions of sub- division approval, as well as the respondent's non- disclosure of the Ireland memorandum, had arisen long before the first article appeared on March 22, 1991. The March 22 article appeared in an election year and it provoked an immediate response from the Region leading directly to the respondent's termination. The Chief Administrative Officer of the Region testified that the political actors were afraid of how the public would react to the story and decided that immediate action was required to put an end to the controversy. It was open on the evidence for the trial judge to find that, but for the article, the Region would have come to a practical resolution of the issue without any impact upon the respondent's continued employment. It is significant that, as a result of the statutory hearing, the Regional Council concluded that there were not grounds for termination for cause. Despite the fact that he was not guilty of wrongdoing, the defamatory article rendered the respondent a liability that had to be disposed of. Had the Regional Council arrived at an independent conclusion that the respondent was guilty of the wrongdoing attributed to him by the article, the situation might well be different. The fact that the Region did not dismiss the respondent for cause, but paid him a substantial termination allowance supports the trial judge's conclusion that the effective cause of his dismissal was the damage to the respondent's reputation and standing resulting from the March 22 article.

[51] Accordingly, I would not interfere with the award of special damages.

(b) General damages

(i) Aggravating factors

[52] The trial judge also awarded $400,000 for general and aggravated damages. The appellants submit that the trial judge erred in awarding aggravated damages.

[53] In Hill v. Church of Scientology, supra, at p. 1205, Cory J. stated that an award of aggravated damages is appropriate:

. . . where the defendants' conduct has been particularly high-handed or oppressive, thereby increasing the plaintiff's humiliation and anxiety arising from the libellous statement. The nature of these damages was aptly described by Robins J.A. in Walker v. CFTO Ltd., supra [(1987), 1987 126 (ON CA), 59 O.R. (2d) 104 (C.A.)], in these words at p. 111:

Where the defendant is guilty of insulting, high-handed, spiteful, malicious or oppressive conduct which increases the mental distress -- the humiliation, indignation, anxiety, grief, fear and the like -- suffered by the plaintiff as a result of being defamed, the plaintiff may be entitled to what has come to be known as "aggravated damages".

[54] As noted in Walker, supra, the compensatory character of aggravated damages distinguishes them from punitive damages. As Cory J. emphasized, at p. 1205, they are intended to "take into account the additional harm caused to the plaintiff's feelings by the defendant's outrageous and malicious conduct."

[55] The trial judge did not make a distinct award of aggravated damages. He stated at p. 403:

. . . the boundary between those factors which increase the general damages, and those which lead to aggravated damages is problematic and on the particular facts of this case it is preferable to deal with the two classes of damages together.

[56] He went on to list a number of factors that, in his view, warranted a substantial damage award. He noted the very serious nature of the libel and the prominence it was given by "one of this country's most prestigious and influential newspapers" and that the libel was repeated several times. The trial judge found that the libel had a devastating effect on the respondent. He referred to several of his findings regarding the appellant Ferguson that led to the finding of malice, especially to Ferguson's failure to give the respondent an adequate opportunity to present his side of the story and to what the trial judge regarded as Ferguson's deliberate attempt to create the false impression that the story represented the recent discovery of a major scandal.

[57] I am not persuaded that the trial erred in taking into account the clear findings of malice on the part of Ferguson and the devastating effect of the libel on the respondent when assessing general damages.

[58] The appellants say that this is not a case for aggravated damages as the respondent was not entirely blameless for what happened. A crucial point in the entire affair was the manner in which he dealt with -- or failed to deal with -- the Ireland memorandum. The respondent consistently denied receiving it before the October 10, 1991 Council meeting, yet the trial judge found that he had received it. The appellants, therefore, contend that much of the aggravation is attributable to this failing, and council's response to it, rather than to any action on their part.

[59] The difficulty with that submission is that none of this would have been an issue had the appellants not published the defamatory articles. They cannot escape the findings of the trial judge that the respondent was the unsuspecting subject of their sensational and unwarranted attack.

[60] As there was no error in principle in taking these aggravating factors into account when assessing the general damages, the only question is whether the damages awarded were excessive. The standard of review of libel damage awards is so stringent as to offer little prospect of success: see, e.g., Hill v. Church of Scientology, supra, at pp. 1194-96. Undoubtedly deterred by these strictures, the appellants have not invited this court to review the quantum of the award as an alternative argument to their basic submission that this was not a case for aggravated damages.

(ii) Other articles

[61] The appellants submit that the trial judge erred in failing to take into consideration reports by other media of the controversy in the Region. The appellants placed special emphasis on an article in The Toronto Star that appeared the day after the first Globe and Mail article, and that in some ways, was even more slanted against the respondent.

[62] I see no merit in this ground of appeal in view of the findings of the trial judge that the appellant Ferguson was intent on breaking a sensational "scoop" and that he achieved that objective with the publication of the first article. The harm to the appellant flowed directly and immediately upon the publication of that article. In my view, the trial judge did not err in failing to reduce the damages because the same libel was published by others.

(c) Punitive damages

[63] Punitive damages are rarely awarded and are only appropriate in limited circumstances. In Hill v. Church of Scientology, supra, at p. 1208, Cory J. stated:

Punitive damages may be awarded in situations where the defendant's misconduct is so malicious, oppressive and high- handed that it offends the court's sense of decency. Punitive damages bear no relation to what the defendant should receive by way of compensation. Their aim is not to compensate the plaintiff, but rather to punish the defendant. It is the means by which the jury or judge expresses its outrage at the egregious conduct of the defendant. They are in the nature of a fine which is meant to act as a deterrent to the defendant and to others from acting in this manner. It is important to emphasize that punitive damages should only be awarded in those circumstances where the combined award of general and aggravated damages would be insufficient to achieve the goal of punishment and deterrence.

(Emphasis added)

[64] In my view, the trial judge erred in awarding punitive damages in the present case. I do not agree that an award of punitive damages was required to achieve the goal of punishment and deterrence in view of the other damages awarded. The award of $780,000 imposes upon the appellants a heavy price for the wrong they have committed. This is a very substantial award that already reflects the trial judge's strong disapproval of the appellant's wrongful conduct. An award of such a significant amount is easily within the range of damages that will have a deterrent effect. I fail to see any need for a further award, in the nature of a fine, to achieve the purposes of punishment and deterrence. The statement of Robins J.A. in Walker v. CFTO Ltd. (1987), 1987 126 (ON CA), 59 O.R. (2d) 104 at pp. 121-22, 37 D.L.R. (4th) 224 is apposite:

In the present case, with total damages to the tune of $908,000, what rational purpose is to be achieved by tacking on an extra $50,000 as exemplary damages? In my view, none. General damages of that magnitude are alone patently sufficient to satisfy whatever need there may be for punishment or deterrence. A different conclusion might prevail if the jury had decided that the general damages required to vindicate the company's reputation (and that, as stated earlier, was the only injury to be compensated for here) were nominal or small or otherwise in some reasonable proportion to the reputational harm caused by the defamatory publication.

[65] Accordingly, I would set aside the award of punitive damages.

(d) Cross-appeal

(i) Relationship between special and general damages

[66] The respondent submits, by way of cross-appeal, that the trial judge erred in taking into account his award of special damages when assessing the appropriate level of general damages. The appellants respond that the trial judge did not err in so doing.

[67] In my view, the amount awarded for general damages must be considered in light of the amount awarded for special damages. Significant awards for special damages in defamation cases are the exception rather than the rule, and it is precisely for that reason that it is said that general damages are "at large".

[68] As noted by Lord Atkin in Ley v. Hamilton (1935), 153 L.T. 384 (H.L.) at p. 386 (a passage quoted by the trial judge at p. 402):

It is precisely because the "real" damage cannot be ascertained and established that the damages are at large. It is impossible to track the scandal, to know what quarters the poison may reach: it is impossible to weigh at all closely the compensation which will recompense a man or a woman for the insult offered or the pain of a false accusation.

[69] The same point was made by Cory J. in Hill v. Church of Scientology, supra, at pp. 1197-98, in refusing to impose a cap on general damage awards in defamation cases. Cory J. contrasted the situation in a personal injury action where the plaintiff is fully compensated for pecuniary losses:

A very different situation is presented with respect to libel actions. In these cases, special damages for pecuniary loss are rarely claimed and often exceedingly difficult to prove. Rather, the whole basis for recovery of loss of reputation usually lies in the general damages award.

(Emphasis added)

General damages for defamation ordinarily compensate the plaintiff for his or her entire loss, including an estimate of actual and anticipated pecuniary loss: McCarey v. Associated Newspapers (No. 2), [1965] 2 Q.B. 86 (C.A.) at p. 104.

[70] In the present case, because of the age and circumstances of the respondent, the trial judge was in the unusual position of being able to measure with some considerable degree of precision the actual damages suffered as a result of the defamation. The trial judge found that the defamation had a measurable effect on the defendant and made a special damages award compensating the respondent for the full measure of the economic loss he would suffer through to retirement. This was not the typical case where the full measure of compensation is made through the award of general damages. It is my view that it was imperative for the trial judge to take into account the very generous award he made for special damages when assessing general damages. To make a general damage award without reference to the special damages would, in my view, constitute an error in principle warranting the intervention of this court.

[71] Indeed, rather than being too low, it seems to me that in view of the special damage award, the general damages are very high. Were it not for the strictures imposed upon this court limiting its intervention to review the quantum of libel damage awards, this would be a case for reducing rather than increasing the general damages awarded, in light of the special damages.

[72] In Hill v. Church of Scientology, supra, Cory J. observed that there was no indication that the level of libel damage awards was a matter of concern in Canada. Cory J. based that opinion on the fact that from 1987 to 1991, the average award in reported libel cases was $30,000. From 1992 to 1995, the average award was said to be $20,000. In the five years following Hill v. Church of Scientology, there has been a steady escalation in the level of libel damage awards. The judgment in the present case serves as an example. It must not be forgotten that the award in Hill v. Church of Scientology was said by the Supreme Court to be justified by the exceptional circumstances of the case. As the British Columbia Court of Appeal stated in Brown v. Cole (1998), 1998 6471 (BC CA), 186 B.C.A.C. 73 at p. 90, [1999] 7 W.W.R. 703 when reducing an award from $450,000 to $160,000, Hill v. Church of Scientology "is not a benchmark in ordinary cases of defamation. One does not start with the awards in Hill v. Church of Scientology, and work oneself down." One should not lose sight of the basic principle that libel damage awards, like damage awards for other wrongs, should be based upon a rational attempt to measure in money terms the loss and injury the plaintiff has suffered. The special damage award in the present case meets that test. It is less obvious to me that an additional $400,000 for general damages does so. It is my view that unless this basic principle is kept clearly in mind in libel cases, there is a clear risk of escalating and excessive awards.

[73] The risk posed by excessive libel damage awards has been judicially recognized in England. The Lord Chief Justice, at the time Master of the Rolls, Lord Bingham stated in John v. MGN Ltd., [1996] 2 All E.R. 35 (C.A.) at p. 48: "A series of jury awards in sums wildly disproportionate to any damage conceivably suffered by the plaintiff has given rise to serious and justified criticism of the procedures leading to such awards." While the circumstances of the present appeal do not permit this court to interfere with the award, neither should this judgment be read as condoning or encouraging similar awards, especially were the circumstances allow for full compensation for pecuniary damages.

(ii) Apology to DeGasperis

[74] DeGasperis threatened The Globe and Mail with litigation with respect to the same article, and the Globe apologized to him immediately. The respondent submits that the disparity of treatment accorded to DeGasperis caused added harm to him and that the trial judge erred in failing to consider that as a factor aggravating general damages.

[75] In my view, the trial judge correctly dismissed this argument. As pointed out by the trial judge, the policy of the law is to encourage apologies and, if accepted, the appellant's argument would undercut that policy. The trial judge found that there was no evidence of added harm to the respondent by the publication of the apology and I see no reason to interfere with that finding. As the trial judge observed, there may be situations where an apology to someone else does aggravate the damages, but the present case does not present such a situation.

Issue 6: Should the damages be increased because of the conduct of the appeal?

[76] The respondent submits that this court ought to increase the damages in view of the fact that the appellants have persisted in their attempt to justify the libel through this appeal. In my view this argument is without merit. The appellants' justification argument presented to this court rested squarely on the proposition that the trial judge erred in his interpretation of the legal meaning of Condition 23. While these arguments proved unsuccessful, they were far from frivolous. There was a serious issue to be argued. This is not a case where the issue of justification was pursued recklessly or without foundation. I see nothing in the conduct of the appeal that would justify this court in increasing the respondent's damages.

CONCLUSION

[77] For these reasons I would allow the appeal, but only to the extent of varying the judgment by deleting para. 3 awarding punitive damages. Otherwise the appeal is dismissed. I would also dismiss the cross-appeal. Although they were unsuccessful on most issues, the appellants did achieve partial success on the appeal and the cross-appeal was entirely unsuccessful. In these circumstances, the parties should bear their own costs of the appeal.

Order accordingly.