Court of Appeal for Ontario

Date: 2019-12-23 Docket: C66641 Judges: Roberts, Zarnett and Jamal JJ.A.

Between

Cable Assembly Systems Ltd. and Brian Manese Plaintiffs (Respondents)

and

Ben Barnes and The Corporation of the City of Brantford Defendants (Appellants)

Counsel

David A. Potts, for the appellants

Peter A. Downard and Dennis M. Touesnard, for the respondents

Heard

December 17, 2019

On Appeal

On appeal from the judgment of Justice R. John Harper of the Superior Court of Justice, dated January 29, 2019, with reasons reported at 2019 ONSC 97.

Reasons for Decision

[1] The appellants appeal from the judgment that they pay the respondents general damages for defamation in the amount of $75,000 and punitive damages in the amount of $75,000.

[2] The appellants raise numerous grounds of appeal. The appellants challenge the trial judge's findings of defamation, malice and abuse of public office and position and take issue with the award of punitive damages.

[3] To provide a proper framework for the analysis of these issues, it is necessary to set out a brief factual background, including a summary of the trial judge's reasons.

Factual Background

[4] This action arises out of derogatory statements about the respondents that Ben Barnes, in his capacity as Manager of Network Services for the City of Brantford, made during a meeting on September 30, 2014, to Chris Earl, the sales representative of Belden CDT Inc. Mr. Barnes made all City decisions on the award of contracts for cabling services with a value of up to $25,000. Contracts of higher value were subject to a mandatory tender process.

[5] Belden manufactured and supplied cable used in installation work required by the City of Brantford. The respondent, Cable Assembly Systems Ltd. ("CAS"), of which Brian Manese is the principal, is a Certified Systems Vendor ("CSV") of Belden cable. From the mid 1990s to 2013, CAS performed all the cable installation work for the City of Brantford.

[6] From 2011 to 2013, Mr. Barnes caused the City to continue to engage CAS. Issues arose between Mr. Barnes and Mr. Manese. Mr. Manese objected to the City's use of other cable installers without providing specifications for the projects or stipulating required standards of cables. Mr. Barnes criticized the quality of CAS' work. Mr. Manese escalated the dispute, meeting with Mr. Barnes' superior, Helen English, and then her superior, Darryl Lee. Still frustrated by what he perceived as an unsatisfactory response from the City, Mr. Manese raised his concerns about Mr. Barnes with a City councillor.

[7] Aware of Mr. Manese's complaints about him, Mr. Barnes met on September 30, 2014, with Mr. Earl and complained about CAS' workmanship, describing it as poor. He showed Mr. Earl photographs of CAS' work, without disclosing that the issues depicted in the photographs had been resolved well over a year earlier. He urged Belden to certify as a CSV a contractor Mr. Barnes was using, Ramkey, incorrectly stating that CAS was the only Belden CSV in the City of Brantford. Mr. Barnes also stated that Brantford Hydro would not use CAS, although CAS had never performed or sought to perform any work for Brantford Hydro. He also intimated that there was an issue with his predecessor and Mr. Manese and the number of invoices, and that he was happy to say that he had reduced that number.

[8] In their statement of defence, the appellants denied the latter two statements, but admitted that Mr. Barnes had uttered the other statements and claimed they were true or made with an honest belief in their truth and as fair comment, and published on an occasion of qualified privilege.

[9] The trial judge rejected the appellants' defences. He found that Mr. Barnes had made all the statements attributed to him, that they were defamatory of the respondents and that he acted in a malicious manner in response to Mr. Manese's complaints, by attempting to malign the reputation of CAS and Mr. Manese with Belden. The trial judge also concluded that Mr. Barnes abused his position as a public officer by making the defamatory statements and by refusing for improper or ulterior motives to hire the services of CAS after October 2014.

[10] Finding that CAS' reputation was placed in serious jeopardy by Mr. Barnes' statements, which could have had a serious negative impact on CAS' business, the trial judge determined that the damage to CAS' reputation merited damages in the amount of $75,000. He did not award any damages for the tort of abuse of public office; however, the trial judge concluded that Mr. Barnes' malicious actions and abuse of his position warranted an award of punitive damages in the amount of $75,000.

Appellate Analysis

Defamation, Malice and Abuse of Position

[11] We are not persuaded that there is any basis for appellate intervention with respect to the trial judge's findings of defamation, malice and abuse of position. The trial judge's findings are amply supported by the record and the appellants' admissions in their statement of defence. He properly cited to and applied the governing principles to determine the issues of defamation, malice and abuse of position.

[12] The trial judge's determination that Mr. Barnes, in his capacity as a public officer of the City of Brantford, acted maliciously in that he made representations that were "purposely false and misleading with the intention to damage the reputation of CAS" (para. 36), was firmly grounded in the evidence that the trial judge was entitled to accept. So was the trial judge's finding at para. 67 of his reasons:

…Barnes' comments in the meeting with Earl were not germane or reasonably appropriate to the occasion of the September 30, 2014 meeting. I also find that Barnes had an ulterior motive. He was responding to the many complaints Manese had made about him to his superiors. As a result, he acted in a malicious manner by attempting to malign the reputation of CAS Ltd. and Manese. Given this finding the Defendants cannot rely on a defence of qualified privilege.

[13] The trial judge's findings foreclosed any defence of honestly held belief, fair comment or qualified privilege. The trial judge's findings also supported his award of general damages.

Punitive Damages

[14] We do not reach the same conclusion, however, with respect to the trial judge's award of punitive damages. In our view, the trial judge erred in making this award.

[15] The entirety of the trial judge's rationale for his award of punitive damages appears at para. 76 of his reasons as follows: "Given my finding that the actions of Barnes were malicious, and an abuse of his position, the Plaintiffs are entitled to punitive damages in the amount of $75,000." The trial judge sets out no basis for the City's liability for punitive damages.

[16] Punitive damages, unlike compensatory damages, are not at large. As a result, an appellate court has a much broader scope for review on an appeal from an award of punitive damages. As Cory J. stated in Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130, at para. 197, "[t]he appellate review should be based upon the court's estimation as to whether the punitive damages serve a rational purpose."

[17] It is well established that punitive damages are exceptional for "malicious, oppressive and high-handed misconduct that offends the court's sense of decency": per Binnie J. in Whiten v. Pilot Insurance Co., 2002 SCC 18, at para. 36. They are only to be awarded where compensatory damages are inadequate to accomplish the objectives of retribution, deterrence, and condemnation: Pate Estate v. Galway-Cavendish (Township), 2013 ONCA 669, at para. 211; Filice v. Complex Services Inc., 2018 ONCA 625, at para. 57.

[18] When considering whether to award punitive damages and in quantifying those damages where such an award is justified, trial judges must consider the punitive components of the compensation otherwise awarded and determine whether they adequately serve to achieve the objectives of retribution, deterrence and condemnation. Failure to do so is an error in principle. See: Pate, at para. 214; Filice, at paras. 59-61.

[19] In this case, the trial judge did not engage in any analysis of why the compensatory award that he decided on was inadequate to achieve the objectives of retribution, deterrence and condemnation. In failing to do so, he committed an error in principle.

[20] In our view, the $75,000 compensatory award of general damages for defamation was adequate to achieve the objectives of retribution, deterrence and condemnation in the circumstances of this case. These circumstances involved utterances made during one meeting to an interlocutor sympathetic to the respondents which had no actual effect on their reputation or business interests. Aggravating circumstances that served to increase the award of general damages included the trial judge's findings that Mr. Barnes acted maliciously and abused his position of public authority.

[21] While Mr. Barnes' conduct was not justified, the appellants will pay for his improper actions through the generous award of compensatory damages. As Binnie J. also said in Whiten at para. 123, "Compensatory damages also punish. In many cases they will be all the 'punishment' required." In our view, that is the case here. We therefore set aside the trial judge's punitive damages award.

Disposition

[22] As a result, we allow the appeal in part and set aside the award of punitive damages.

[23] The appeal is otherwise dismissed.

[24] In our view, success on this appeal was mixed. We make no order as to costs.

"L.B. Roberts J.A."

"B. Zarnett J.A."

"M. Jamal J.A."

Footnote

[1] The appellants abandoned at the hearing of the appeal two new issues that the action should have been dismissed under s. 137.1 (Anti-Slapp provisions) of the Courts of Justice Act and in accordance with the principles articulated by the English Court of Appeal in Jameel (Yousef) v. Dow Jones & Co. Inc., [2005] Q.B. 946 where the extent of the publication is small and the costs out of proportion to any harm.