COURT OF APPEAL FOR ONTARIO

CITATION: Foulidis v. Baker, 2014 ONCA 529

DATE: 20140708

DOCKET: C56528

MacPherson, Watt and Benotto JJ.A.

BETWEEN

George Foulidis

Plaintiff (Appellant)

and

Bruce Baker

Defendant (Respondent)

Paul J. Pape and Andrea M. Bolieiro, for the appellant

Gavin Tighe and Stephen Thiele, for the respondent

Heard: May 20, 2014

On appeal from the judgment of Justice John A. B. Macdonald of the Superior Court of Justice, sitting without a jury, dated December 27, 2012, with reasons reported at 2012 ONSC 7295.

Watt J.A.:

[1] Untendered service contracts attracted the attention of at least two candidates for office in the Toronto municipal elections of 2010. And what the candidates said about untendered service contracts attracted two actions for libel.

[2] Both actions failed at trial. The unsuccessful plaintiff in both actions appeals. These reasons, and those released concurrently in the companion appeal of Foulidis v. Ford (C56537)[^1], explain why both appeals fail.

THE BACKGROUND FACTS

[3] First, some background about the principals, the contract and the allegedly libellous letter.

The Principals

[4] The Foulidis family has been in the restaurant business for many years. Through their company, Tuggs Inc. (“Tuggs”), the family operated the Boardwalk Café in the Beaches area of Toronto under a long-term lease with the City. The lease was to expire in 2007.

[5] George Foulidis was not an officer or director of Tuggs but was involved in the operation of the Boardwalk Café. He was the family member who sought for Tuggs a new and exclusive long-term lease to operate the Boardwalk Café and other concessions after the prior lease expired in 2007.

[6] Bruce Baker was a resident of the Beaches who sought election as a councillor for Ward 32 in the municipal elections in the fall of 2010.

The Original Lease

[7] In 1987, Tuggs was the successful bidder for a long-term (20 year) exclusive lease to operate food and beverage facilities, including the Boardwalk Café, along the eastern Beaches area of Toronto. Tuggs agreed to spend $2,000,000 to improve the Boardwalk Café premises and other concession facilities.

Lease Expiry and Negotiation

[8] During the fall of 2006, George Foulidis prepared and submitted a proposal on behalf of Tuggs to Parks staff of the City promising a further investment of $2,000,000 in the Boardwalk Café and concessions in return for another long-term lease to operate those facilities. Among other things, Foulidis contacted the office of the incumbent councillor for the Beaches, Sandra Bussin, to solicit her support for the Tuggs bid. Some councillors opposed Tuggs’ application because it did not involve an RFP (Request for Proposals) process.

[9] In early 2007, City Council voted to approve the Tuggs proposal and directed Parks staff to begin negotiations with Tuggs on a new lease that was to include certain conditions. As it turned out, negotiations would extend over a period of three years.

The Media Interest

[10] The decision to proceed with the untendered Tuggs proposal attracted media attention. The controversy continued into the election year, 2010. Some articles drew a connection between contributions to councillor Bussin’s earlier campaign for re-election and her support of the Tuggs proposal. Some commentators went so far as to suggest that a police investigation should be pursued.

[11] Neither Foulidis nor Tuggs made any contributions to councillor Bussin’s campaign.

The Baker Campaign and the Tuggs Deal

[12] On January 4, 2010 Bruce Baker filed his nomination papers as a candidate for City Council in the election to be held in the fall of 2010. By April 2010, Baker made the Tuggs deal an issue in his campaign.

[13] A City staff member raised issues about the untendered nature of the Tuggs deal. On April 28, 2010 the Government Management Committee of City Council referred the issue to Council for further consideration, but made no recommendation about the course to be followed. Bruce Baker attended the Committee Meeting.

The Article in Toronto Life

[14] On May 11, 2010 an article on election finance donations was published by Toronto Life. The article made specific reference to the contributions of the Foulidis family and their friends to Sandra Bussin’s 2006 election campaign. The article noted that the contributions and campaign were shortly before the Tuggs lease was extended by Council in 2007.

The Malamas Letter

[15] On the evening of May 11, 2010 Baker got an email from the same City staff member who had questioned the propriety of the untendered lease agreement with Tuggs before the Government Management Committee on April 28, 2010. The email contained no original text but attached a letter from William Malamas to a Toronto Star newspaper reporter.

[16] The Malamas letter read:

I read your article, published in the Toronto Star on April 29, 2010. I know George Foulidis well.

George Foulidis has disclosed to me, repeatedly, how he manages to obtain favours from the Toronto City Hall, in connection with his lease in the beaches.

Mr. Foulidis has specifically told me, that he manages to obtain, whatever favours he wants from the City, by finding the key people who are responsible in overseeing his lease with the City.

Mr. Foulidis has specifically and repeatedly told me that he pays, directly or indirectly, the key people who make decisions about his lease.

Mr. Foulidis also has told me that he attends fundraising events for councillors. He makes contributions to their election campaigns. He hires lobbyists who lobby councillors and/or key people influential with the City, in order to obtain their support in obtaining favours from the City, in connection with his lease.

Mr. Foulidis has specifically told me about his connections with the former councillor of the area and how he, always, was able to obtain his support in connection with his lease.

I know nothing as to how he obtained the support of the present councillor for the area and/or how he obtained the support of the other people from the City who oversee his lease, at the present time.

However, judging from what Mr. Foulidis has told me about the actions that he takes to obtain support from the key people who oversee his lease, I believe that the support he has, presently, obtained is not genuine.

In my opinion the RCMP, not the Toronto Police, should be called in, to investigate as to how Mr. Foulidis has obtained support from the City of Toronto, throughout the last twenty years, in connection with his lease and all the favours that he has obtained from the City, in connection with his lease, and the means that he used to obtain such favours.

If you wish to further discuss this matter with me, please contact me, I am faxing a copy of this letter to the persons or city officials noted below.

Yours truly,

William Malamas [Emphasis in original.]

[17] Baker did not know William Malamas and made no effort to contact him despite inclusion in the Malamas letter of all relevant contact information.

[18] The Malamas letter to the Toronto Star reporter indicated that copies of it had been sent to the Mayor and seven incumbent councillors. Baker assumed that everyone shown as being sent a copy had received one.

The Baker Letter

[19] City Council was to vote on the Tuggs lease on May 12, 2010. On that day, Baker delivered a letter to the City Clerk. The letter, marked “confidential”, was addressed to the Mayor and councillors. To ensure confidentiality, staff in the City Clerk’s office transferred the letter to purple paper and delivered it to the intended recipients.

[20] Baker’s letter refers to but does not attach the letter from William Malamas and the article in Toronto Life. Baker sought a full audit of election finance donations and a full investigation of the allegations by Toronto Police.

[21] The Baker letter, addressed to “councillors and Mayor Miller”, was in these terms:

I am a beach resident fighting the lease agreement between the City of Toronto and Tuggs Inc.

As a concerned beach resident and upon learning of new revelations over the deal between the City of Toronto and Tuggs Inc., I am calling on you to call in the Toronto Police to investigate.

What has transpired between the City of Toronto and Tuggs Incorporated-aka: Boardwalk Café- has new meaning when a letter was received by residents fighting Tuggs Inc’s expansion plans that alleges that Tuggs Inc’s owner, George Foulidis, has influenced Toronto City Hall for favors.

The letter was originally sent to Toronto Star reporter Paul Moloney and copied to residents fighting the expansion plans. The letter was sent from Mr. William Malamas from Richmond Hill.

Aside from the letter received from Mr. Malamas, the Toronto Life, May 11^th issue of 2010 raises further questions regarding election finance donations. Enough to ask for a full audit and a full investigation into the allegations.

[22] When Baker delivered his letter to the City Clerk’s office, he did not ask whether the Malamas letter had been delivered to the Mayor and councillors.

Approval of the Lease

[23] At its meeting on May 12, 2010 City Council approved the Tuggs lease to operate the Boardwalk Café and other concessions in the Beaches area for another 20 years.

The Findings of the Trial Judge

[24] The trial judge was satisfied that:

i. Baker wrote and published the letter;

ii. the letter referred to Foulidis by name and through his association with Tuggs; and

iii. the letter was defamatory of George Foulidis.

The trial judge described the sting of the libel in these terms:

[19] …The particular sting of the libel is the statement that he influenced City government for favours, inferentially in respect of Tuggs Inc.’s contract with the City, in a manner which merits a police investigation. The letter is also defamatory in asserting that there are questions about Mr. Foulidis’ election finance donations, which, inferentially, are related to the aforesaid influence.

[25] The trial judge then considered the three defences advanced by counsel for Baker:

i. fair comment;

ii. qualified privilege; and

iii. responsible communication.

[26] The trial judge concluded that some of the contents of the letter were protected by fair comment, but others, which were assertions of fact, were beyond the reach of the fair comment defence. He deferred consideration of the contents protected by fair comment until he discussed express malice later in his reasons.

[27] The trial judge concluded that the Baker letter had been delivered to City Council on an occasion of qualified privilege. He concluded:

[67] I conclude that the defendant had a legitimate interest in directing his letter to City Council for the reasons he did, calling for investigations into serious allegations of unknown and, for him, unascertainable reliability which were reasonably seen as putting in question the integrity of the governmental processes for which City Council was responsible. The members of City Council who received the Baker letter had a corresponding interest and, given the serious nature of the allegations which impugned the integrity of the processes for which Council was responsible, a duty to receive it. Leaving aside the issue of express malice, I conclude that the Baker letter was delivered on an occasion of qualified privilege.

[28] The judge rejected the defence of responsible communication on a matter of public interest for several reasons that he expressed in these terms:

[70] In my view, there are several related reasons why this defence is not available to the defendant. This case does not involve either traditional media or new media dissemination of information. It involves communication which is almost antiquated in nature: a letter, delivered by hand. The letter was not published generally, as is the case with media publication, but to a select and focused few. Further, in a case of widespread media publication, the defence of qualified privilege is often unavailable. That was a reason given in Grant v. Torstar [2009 SCC 61, [2009] 3 S.C.R. 640] for the development of this new defence. In this case, the defence of qualified privilege is available to the defendant. In my view, it adds unnecessary complexity to this area of the law to hold that this important new defence is available to a non-media defendant to whom the defence of qualified privilege has been found to apply.

[29] The trial judge considered whether express malice removed Baker’s comments from the protections afforded by qualified privilege or fair comment. He concluded that Foulidis had failed to prove express malice. The trial judge explained:

[75] In my opinion, the plaintiff has failed to prove express malice. I won’t repeat my findings about why the plaintiff did what he did and how that was directed to serving the interests of the public, both in advancing the interests of Ward 32 electors and in urging City Council to cause or to make inquiries into the Malamas and Toronto Life allegations. These were his dominant motives, in my opinion. I am satisfied that any incidental personal gain as a candidate or otherwise which might have been derived by the defendant from his letter was not in conflict with the duty/interest equation which is the basis for my finding that the defendant wrote his letter on an occasion of qualified privilege. Similarly, I am satisfied that any incidental personal gain as a candidate or otherwise was sufficiently connected to the purpose for which the defence of fair comment exists, namely to ensure robust and candid commentary on matters of public concern, that it cannot be seen as establishing express malice.

[76] The defendant also did not knowingly or recklessly disregard the truth of what he stated in his letter. He was careful to refer to the content of the Malamas letter and to the Toronto Life election finance assertions as allegations. He did not hold them out as truth to be accepted. To the contrary, he called for investigation of them. He was neutral about their factuality and concerned to have it subjected to inquiry. I have already commented on the short period of time he had before City Council would vote, and how limited his opportunities were for productive inquiry into the facts.

THE GROUNDS OF APPEAL

[30] The appellant says that the trial judge erred in failing to find that the defence of qualified privilege was lost because:

i. the dominant motive for making the statements contained in the letter was malice; or

ii. the statements were not commensurate with the occasion that gave rise to qualified privilege.

[31] The appellant also challenges the costs order made against him. He contends that since the action was dismissed on the basis of qualified privilege, which only becomes engaged on proof of the defamatory nature of the publication, he should not be required to pay the defendant’s costs.

Ground #1: Was the Baker Letter Reasonably Appropriate to the Occasion of Qualified Privilege?

[32] Several features of the background provide the setting for an assessment of this claim of error.

The Essential Facts

[33] Baker delivered his letter to the Mayor and members of Council on May 12, 2010, the day on which Council was to vote on approval on the sole source contract with Tuggs to operate the Boardwalk Café and related concessions. The letter referred to but did not enclose the letter sent by William Malamas to a Toronto Star reporter and an article published the previous day by Toronto Life magazine.

[34] In his letter, Baker asked or invited Council to do two things:

i. call in Toronto Police to conduct a full investigation; and

ii. request a full audit.

regarding election finance donations. Baker marked his letter “confidential” and delivered it to the office of the City Clerk. The letter was forwarded to its intended recipients as a confidential document by staff in the City Clerk’s office.

[35] The Malamas letter that Baker received the evening before he sent his letter to the Mayor and Council indicated that it (the Malamas letter) had been “cc’d” to the Mayor and several members of Council.

The Positions of the Parties

[36] For the appellant, Mr. Pape submits that the occasion that gave rise to the defence of qualified privilege was the need for Council to receive timely notification of information relevant to the impending vote on approval of the Tuggs contract. To be protected by qualified privilege, the Baker letter must be reasonably appropriate to achieve the purpose of that occasion.

[37] Mr. Pape says that the Baker letter was not reasonably appropriate to achieve the purpose of the occasion. The letter simply repeated previously unsubstantiated and unproven allegations of unascertainable reliability from unknown sources. The information had already been communicated to several members of Council. Some of the allegations, those made in the Toronto Life article, were already in the public domain. The trial judge erred in considering as dispositive Baker’s subjective belief that the letter was worthy of consideration by Council, rather than applying an objective standard.

[38] For the respondent, Mr. Tighe says the trial judge applied the proper test. His finding, which involves a question of mixed fact and law, is entitled to deference on appeal. The appellant has demonstrated no palpable and overriding error that would warrant our intervention. Baker acted in the interests of the electors in Ward 32. He provided timely notice to the decision-makers of matters that were relevant to their decision.

The Governing Principles

[39] The controversy here is governed by the application of some basic principles applicable to the defence of qualified privilege and the circumstances that may render that defence unavailable in answer to a defamation claim.

[40] First, qualified privilege attaches to the occasion on which a communication was made, not to the communication itself: Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), [1995] 2 S.C.R. 1130, at para. 143; RTC Engineering Consultants Ltd. v. Ontario (Ministry of the Solicitor General & Correctional Services-Office of Fire Marshall) (2002), 2002 CanLII 14179 (ON CA), 58 O.R. (3d) 726 (C.A.), at para. 14; and Botiuk v. Toronto Free Press Publications Ltd., 1995 CanLII 60 (SCC), [1995] 3 S.C.R. 3, at para. 78.

[41] Second, on an occasion of qualified privilege, one person may defame another without attracting liability for defamation. The law presumes that the defamatory statement was made honestly and in good faith: RTC Engineering, at para. 14. Said somewhat differently, the legal effect of the defence of qualified privilege is to rebut the inference, one that naturally emerges from the publication of defamatory words, that they were spoken with malice: Hill, at para. 144.

[42] Third, as the term “qualified privilege” would itself suggest, the privilege is not absolute: RTC Engineering, at para. 18.

[43] Fourth, qualified privilege may be defeated when the information communicated in the statement is not reasonably appropriate in the context of the circumstances existing on the occasion when the information was given: Hill, at paras. 146-147; RTC Engineering, at para. 18; Botiuk, at para. 80; and Douglas v. Tucker, 1951 CanLII 54 (SCC), [1952] 1 S.C.R. 275, at p. 286.

The Principles Applied

[44] As I will explain, two principal reasons persuade me not to give effect to this ground of appeal.

[45] First, the trial judge’s finding that the Baker letter was reasonably appropriate in the context of the circumstances of the occasion when the information was given is pre-eminently a finding of fact that is subject to deference in this court. The appellant has not pointed to any palpable and overriding error made by the trial judge in reaching his conclusion. Nor has the appellant identified any legal error in the test applied, which was objective rather than subjective as the appellant contends.

[46] Second, the timing and manner of the communication were reasonably appropriate in the context of the circumstances that existed on the occasion when the information was provided. The letter was sent to a restricted constituency – the parties who would make the decision about the contract. The letter was marked and treated as “confidential” and delivered the day on which the decision was to be made. The letter was not disseminated to the world at large, as for example, by dispatch to media organizations.

Ground #2: Alleged Error in Failure to Find Malice

[47] The second error alleged by the appellant advances a discrete basis which, if accepted, would eliminate the defence of qualified privilege advanced at trial.

The Additional Facts

[48] In connection with this ground of appeal, it is essential to keep in mind one additional feature of the background. The Malamas letter Baker received on the evening of May 11, 2010, and to which he referred in his confidential letter to the Mayor and Council, contained contact information for Malamas – his residential and email address and his telephone number. Malamas lived in a Toronto suburb close to the northern boundary of the city.

The Positions of the Parties

[49] For the appellant, Mr. Pape submits that the trial judge erred in failing to find that the defence of qualified privilege was defeated by malice on the part of Baker. Malice can be established by proof of a knowing or reckless disregard for the truth, or by proof of an ulterior or indirect motive. A plaintiff can establish malice by drawing inferences from the language of the allegedly defamatory communication or by introducing extrinsic evidence.

[50] In this case, Mr. Pape says, the trial judge erred in failing to draw the required inferences from the uncontroverted facts. Baker made no effort to verify accusations that he acknowledged were “shocking” and “unbelievable”. The allegations were made by a person with whom Baker had had no previous dealings about a person of whom Baker thought favourably. That Baker considered and characterized Malamas’ letter as mere “allegations” does not warrant a finding that Baker was not reckless with respect to the truth of those allegations.

[51] For the respondent, Mr. Tighe submits that on an occasion of qualified privilege, we begin with a presumption of good faith. Qualified privilege rebuts the inference of malice that would normally arise from the publication of defamatory words. It is the burden of a plaintiff to prove malice, that is to say, that the communication was animated by ill-will or indirect motive. The burden is an onerous one to discharge and requires proof that the defendant knew he was not telling the truth or that he was at least reckless about the truth of his comments.

[52] In this case, Mr. Tighe says, the record is barren of any evidence of express malice. The parties did not know one another. Baker had a favourable impression of Foulidis from what he had heard of him. Baker’s failure to contact Malamas to verify his allegations would have made no difference and cannot ground a finding of reckless disregard for the truth and thus a finding of malice.

The Governing Principles

[53] Several principles furnish the guidance necessary to a just determination of this ground of appeal.

[54] First, qualified privilege may be lost if the dominant motive for the statement was malice: Hill, at para. 144; RTC Engineering, at para. 18; and Botiuk, at para. 79.

[55] Second, to defeat a defence of qualified privilege, the dominant motive for publishing the statement must be actual or express malice: Hill, at para. 144; Botiuk, at para. 79; and Horrocks v. Lowe, [1975] A.C. 135 (H.L.), at p. 149.

[56] Third, malice means spite or ill-will, but also includes any indirect motive or ulterior purpose that conflicts with the sense of duty or mutual interest that the occasion giving rise to qualified privilege created: Hill, at para. 145; and Botiuk, at para. 79.

[57] Fourth, malice can also be established by showing a defendant spoke or wrote dishonestly or in knowing or reckless disregard for the truth: Hill, at para. 145; Botiuk, at para. 79; and RTC Engineering, at para. 18.

[58] Further, the onus rests on the plaintiff to prove malice by inference, extrinsic evidence, or both. This follows from the effect of qualified privilege, which is to rebut the inference of malice that arises from the fact of publishing defamatory words: Hill, at para. 144; Raymond E. Brown, Brown on Defamation, loose leaf, 2nd ed. (Toronto: Carswell, 2011), at p. 16-2.

[59] Finally, whether a plaintiff has established malice to rebut a defence of qualified privilege is a question of mixed fact and law, heavily dependent on the facts disclosed by the evidence adduced at trial and subject to the palpable and overriding standard of review on appeal: Chohan v. Cadsky, 2009 ABCA 334, 464 A.R. 334, leave to appeal to S.C.C. refused, [2009] S.C.C.A. No. 496, at para. 87; and Cimolai v. Hall, 2007 BCCA 225, 44 C.P.C. (6th) 389, at para. 30.

The Principles Applied

[60] For several reasons, I would reject this ground of appeal.

[61] First, after correctly articulating the test for malice and assigning the onus of proof to the plaintiff, the trial judge made an express finding, anchored in the evidence adduced at trial, that the plaintiff had failed to prove malice. This conclusion is heavily dependent on findings of fact made by the trial judge and is subject to review on a standard of palpable and overriding error: Chohan, at para. 87. The appellant has failed in his quest to identify any such error on appeal.

[62] Second, the trial record is barren of any evidence of an existing relationship between the parties, all the more so of any animosity or ill-will of Baker towards Foulidis. The trial judge expressly found that any incidental personal gain Baker might have derived from the letter as a candidate in the upcoming municipal elections did not conflict with the duty/interest equation that grounded the finding that the letter was sent on an occasion of qualified privilege.

[63] Third, while it is true that Baker did not verify the accuracy of the facts that generated Malamas’ allegations, the manner in which he communicated his letter, as well as its contents, belied any assertion of malice. Baker did not assert that the allegations were anything more than allegations, something that warranted investigation. He did not vouch for their truthfulness. His communication was designated “confidential”, sent only to the decision-makers, and not disseminated to the electors or population at large.

THE COSTS APPEAL

[64] The appellant also seeks leave to appeal the costs order made against him at trial.

[65] Counsel for the appellant at trial (not Mr. Pape) asked the trial judge to award no costs to the defendant despite his success at trial. Counsel submitted that the defendant used the Tuggs deal as a political “football” to advance his campaign for a seat on Council. Such an irresponsible use of a private citizen and his business for perceived political gain, counsel submitted, warranted denial of costs despite the defendant’s success at trial.

[66] The trial judge recognized that he had discretion to deny costs to a successful libel defendant where the words were abusive but not libellous and there was reason for the court to express its disapproval of the defendant’s conduct. The trial judge acknowledged a similar discretion in cases, like this, where the words were libellous but protected by qualified privilege.

[67] The trial judge refused to deny the defendant his costs. The judge pointed out that Baker recognized the importance of verifying the accuracy of the underlying allegations. He was careful never to assert their truth. He acted in the public interest, not irresponsibly, abusively or offensively.

[68] It is well established that a costs award should be set aside on appeal only if the trial judge has erred in principle or has made an award that is plainly wrong: Hamilton v. Open Window Bakery Ltd., 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27.

[69] Mr. Pape submits that the trial judge erred in awarding Baker his costs. The judge failed to take into account Baker’s divided success at trial. The letter was defamatory. Baker made no effort to verify the truthfulness of the allegations contained in the Malamas letter, claims made by an unknown and untested source. Further, Baker’s subsequent conduct did not include any acknowledgment that the allegations were without foundation or any apology to the appellant.

[70] I would not interfere with costs award made by the trial judge. The award reflects no error in principle and is not plainly wrong.

CONCLUSION

[71] For these reasons, I would dismiss the appeal in its entirety. The respondents are entitled to their costs of the appeal that I would fix, as counsel have agreed, at $27,651, inclusive of disbursements and all applicable taxes, for Baker and Ford, in the companion appeal, jointly.

Released: July 8, 2014 (JCM)

“David Watt J.A.”

“I agree J.C. MacPherson J.A.”

“I agree M.L. Benotto J.A.”

[^1]: The reasons in Foulidis v. Ford also explain the basis of our jurisdiction to hear both appeals.