CITATION: Salewski v. Symons, 2012 ONSC 236

COURT FILE NO.: 11-50861

DATE: 2012/01/09

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

DOYLE SALEWSKI INC. and DAVID MACASKILL

Plaintiffs

– and –

JAMES IVOR SYMONS (aka IVOR SYMONS, JAMIE SYMONS, JAMES SYMONS)

Defendant

Jason Dutrizac, for the Plaintiffs

Cheryl Gerhardt McLuckie, for the Defendant

HEARD: December 1, 2011 (Ottawa)

REASONS FOR DECISION

BEAUDOIN J.

[1] There are two motions before me: an initial motion brought by the Defendant to strike the Statement of Claim as originally pleaded. The second motion is brought by the Plaintiffs to amend their pleading, which motion is opposed by the Defendant.

[2] The Plaintiffs commenced this action by Statement of Claim issued March 10, 2011. The Plaintiffs, Doyle Salewski Inc. (“DSI”) and David MacaskiIl (“Macaskill”), seek damages for libel, slander and injurious falsehood, aggravated, exemplary and punitive damages and declaratory relief. DSI carries on business in the areas of financial planning, restructuring, bankruptcy and insolvency in the Province of Ontario and Quebec. Brian P. Doyle is the president of DSI and is a licensed trustee in bankruptcy. Macaskill is a self‑employed financial consultant and has been an associate of DSI and has worked on various bankruptcy, receivership and proposal files for DSI from time to time.

[3] The Defendant, James Ivor Symons (“Symons”), is an alumnus of the Sedberg School Association/Association de l’école Sedberg (the “School”), a private boarding school located outside of Montebello, in the province of Quebec, which was founded in 1939 and run by a Board of Trustees.

Background

[4] By late 2009, the School was short of operating funds and in early 2010, the Board of Trustees sought advice from DSI. The Board of Trustees decided to make a Proposal and to find a Debtor in Possession (“DIP”) lender to finance the operations to the end of the school year and then pursue a sale of the property. A Notice of Intention to File a Proposal under the Bankruptcy and Insolvency Act (the “Act”) was filed on March 15, 2010. DSI was appointed as DIP monitor. Macaskill was retained by DSI to provide assistance in carrying out its duties in the administration of the estate.

[5] Symons formed a group with others to investigate the purchase of the School. The group contacted the DIP lender with respect to financing. The group prepared various business plans. The Plaintiffs alleged that the efforts of the group interfered with the business of the School and caused problems for DSI in efficiently carrying out its duties, however, no causes of action are asserted with respect to these steps taken by the group.

[6] At the first meeting of creditors, held June 21, 2010, an Amended Proposal was unanimously approved by the creditors of the School. DSI was ordered to conduct a sale of all of the assets upon receipt of court approval, which was received on August 11, 2010.

[7] The sale proceeded by tender, and DSI proceeded to negotiate a sale with the Vipassana Foundation. During that time, another potential purchaser, Geoff Green, expressed interest. On December 1, 2010, the Vipassana Foundation submitted a conditional offer for $2,750,000.00, with an expiry date of December 3, 2010, which was then extended to December 6, 2010. On December 7, 2010, Geoff Green submitted an unsigned letter of intent for $2,500,000.00. He later submitted a formal offer of $2,900,000.00 however the Vipassana Foundation decided to waive all conditions and proceeded to close. The sale to the Vipassana Foundation was approved by the court on January 12, 2011.

[8] In the course of the negotiation of the sale of the assets, Symons sent a letter of complaint to the Office of the Superintendent of Bankruptcy (“OSB”). The letter, dated November 16, 2010, identifies itself as a formal letter of complaint with respect to the estate of the School. The letter alleges that Macaskill acted in conflict of interest while retained by DSI to assist in the administration of the estate and fulfilling its duties as trustee. The letter of complaint was responded to by the OSB in a letter dated December 21, 2010, wherein the OSB advised that the complaint would be closed.

[9] Symons filed a further letter of complaint with the OSB on February 7, 2011. The complaints made in the letter relate to the conduct of both DSI and Macaskill in respect of the administration of the estate and their duties as trustee. Again, the letter is clearly identified as a letter of complaint and cited breaches of sections 13.3(1)(a)(i) and 52 of the Act. The OSB provided a response on February 23, 2011, and specifically referenced its duty to keep a full record of all complaints and make such specific investigations with regards to such complaints as the Superintendent may determine. Again, the Defendant was advised that his complaint would be closed.

[10] The Plaintiffs then commenced this action on March 9, 2011 seeking damages from the Defendant with respect to the alleged defamatory statements as set out in the letters of complaint to the OSB. On May 19, 2011, the Defendant brought a motion to strike out the Statement of Claim pursuant to Rule 21.01 (1) (b) of the Rules of Civil Procedure.

[11] On or about May 12, 2011, DSI served summonses on Jean Schnob and Benoit Groulx pursuant to s. 163 of the Act. Messrs. Schnob and Groulx are chartered accountants with Raymond Chabot Grant Thornton, which firm acted as accountants for the Sedberg School Association. At the time the summonses were served, the property of the insolvent School had been sold. Those examinations took place on May 26, 2011.

[12] The Plaintiffs subsequently brought a motion for leave to amend their claim on August 12, 2011 as a result of the evidence given by Mr. Schnob and Mr. Groulx on their s. l63 examinations.

The Issues

[13] These are the issues:

(a) what is the test for the striking of a pleading under Rule 21.01 (l ) (b);

(b) whether the statements alleged by the Plaintiffs to be defamatory are protected by absolute privilege;

(c) whether the Statement of Claim should be struck out as disclosing no reasonable cause of action and the Plaintiffs’ action be dismissed; and

(d) should the Plaintiffs be given leave to amend?

The Original Pleading

[14] In this case, the Statement of Claim specifically refers to the letters to the OSB without citing specific passages from the correspondence nor are the letters themselves attached to the Statement of Claim. The relevant correspondence was found in the Defendant’s first motion to strike the Statement of Claim. The relevant letters are the following:

• the letter of complaint from Mr. Symons to the Office of the Superintendent of Bankruptcy, dated November 16, 2010 (paras. 32, 33 and 37 of the Statement of Claim);

• the letter in response from the Office of the Superintendent, dated December 21, 2010 (para. 37 of the Statement of Claim);

• the letter of complaint from Mr. Symons to the Office of the Superintendent dated February 7, 2010 (para. 40 of the Statement of Claim); and

• the letter in response from the Superintendent, dated February 23, 2011 (para. 41 of the Statement of Claim).

[15] In my view, the critical paragraphs are as follows:

32 During the sale negotiations, Doyle was advised that a complaint letter had been received at the Office of the Superintendent of Bankruptcy (the “OSB”) from Symons expressing his concerns with the involvement of Macaskill in the estate and alleging a conflict of interest.

33. More particularly, Symons made certain false and defamatory statements concerning the Plaintiffs to third parties for the express purpose of causing damage and loss to the Plaintiffs, and diminution of the reputations of the Plaintiffs in their respective professions, particulars of which include:

(a) Macaskill was conflicted as he is an employee and associated with DSI and the trustee of the proposal;

(b) Macaskill’s involvement was prejudicial to his interest in being a party to the settlement and to the fair resolution of the debtor’s matter;

(c) Macaskill is a governor of the Foundation who is also a creditor and favour could be made to the Foundation by transferring a portion of the proceeds to the Foundation;

(d) There was a conflict as Macaskill acted as a volunteer business manager for the debtor at least two years prior to the NOI and was acting as agent for the proposal; and

(e) Macaskill had a financial interest via his multiple roles with the debtor, the proposal trustee and member of the board of governors of the Foundation.

42. The Defamatory Statements in their actual and ordinary meaning or, alternatively, by way of innuendo, meant and were understood to mean, inter alia, that the Plaintiffs were incompetent, unethical, unscrupulous, deceitful, dishonest and/or devious.

The Test for Striking Out a Pleading

[16] Rule 21.01 (1) (b) allows the court to strike a pleading on the “ground that it disclose no reasonable cause of action”. As noted by Shaw, J. in AGFA v. Partner Prepress, [2006] O.J. No. 3373 at para. 9:

The test to be applied on a motion to strike a pleading is well settled:

(a) it must be plain and obvious that the claim discloses no reasonable cause of action;

(b) the material facts pleaded are to be taken as proven unless they are patently incapable of proof;

(c) neither the complexity of the issues, the novelty of the cause of action, nor the potential of a strong defence is to prevent a party from proceeding with its case; and

(d) a pleading should be read generously so as not to unfairly deprive a party of the benefit of the pleading.

See Haskett v. Trans Union of Canada Inc. [2001] O.J. No. 4949 (S.C.J.) at para 2; Balanyk v. University of Toronto, 1999 14918 (ON SC), [1999] O.J. No. 2162 (S.C.J.) at paras 22 and 30)

While no evidence is allowed on a motion to strike a pleading, a party is entitled to rely on documents referred to in the Statement of Claim.[^1]

Are the Impugned Statements to the Office of the Superintendent in Bankruptcy protected by absolute privilege?

[17] Statements made in the context of a judicial or quasi‑judicial proceeding are covered by absolute privilege. This is for public policy reasons to ensure that complainants do not stay quiet for the fear of being sued in defamation.

[18] Absolute privilege is summarized by Forestell J. in Byrne v. Maas, 2007 49483 (ON SC), [2007] O.J. No. 4457. That case involved a letter of complaint made by the Defendant under the Police Services Act, R.S.O. 1990, c. P.15. The Plaintiff was an OPP officer who had brought an action against the Plaintiff in defamation. The court struck the claim and noted this at para. 5:

Absolute privilege or immunity applies to communications during or incidental to judicial or quasi-judicial proceedings. No action for defamation will lie for words spoken in judicial or quasi-judicial proceedings. The immunity extends to letters of complaint (see: Sussman v. Eales, [1986] O.J. No. 317 (C.A.); Hamalengwa v. Duncan, 2005 33575 (ON CA), [2005] O.J. No. 3993 (C.A.)).

[19] Professor Brown in The Law of Defamation in Canada (2nd Ed., 1999) at pp. 12‑2 and 12‑3 summarizes the law of absolute privilege as follows:

There is an absolute privilege for all those communications made in the course of, or incidental to, the processing and furtherance of judicial and quasi‑judicial proceedings. To qualify as a quasi‑judicial proceeding the tribunal must exercise functions equivalent to those of a court of justice. Among the attributes of such a tribunal are the ability to adjudicate upon and determine rights between competing litigants, to require attendance at a public hearing at which the witnesses testify under oath, to administer fines, impose punishment, render decisions and enforce orders. Such proceedings are also governed by principles of fairness and justice with a fixed procedure comparable to that of a judicial body. The immunity extends to all those persons participating in the proceedings including the judge, jury, witnesses, parties and their counsel, and to the contents of all pleadings and documents filed with the court or matters offered in evidence, and to any actions taken preliminary but necessary to the institution of the action or, following the trial, essential to effect an appeal or execute on a judgment.

[20] The rationale for this privilege was cited by Ferrier J. in 1522491 Ontario Inc. v. Stewart, Esten Professional Corp., 2010 ONSC 727, [2010] O.J. No. 765 (Div. Crt.) at para. 32:

32 The rationale for the rule of absolute privilege has been expressed in many cases over the years. The following passage from Raymond E. Brown, The Law of Defamation in Canada, 2nd ed., looseleaf (Toronto: Carswell, 1999) at 12-27, correctly states the rationale:

Absolute privilege has been conceded on obvious grounds of public policy to insure freedom of speech where it is essential that freedom of speech should exist. It is essential to the ends of justice that all persons participating in judicial proceedings should enjoy freedom of speech in the discharge of their public duties or in pursuing their rights, without fear of consequences. The purpose of the law is, not to protect malice and malevolence, but to guard persons acting honestly in the discharge of a public function, or in the defense of their rights, from being harassed by actions imputing to them dishonesty and malice. Freedom from vexatious litigation for honest participants is so important that the law will not take the risk of subjecting them to such danger in order that a malicious participant may be mulcted in damages. The true doctrine of absolute immunity is that, in the public interest, it is not desirable to inquire whether utterances on certain occasions are malicious or not. It is not that there is privilege to be malicious, but that, so far as it is a privilege of the individual, the privilege is to be exempt from all inquiry as to malice; the reason begin that it is desirable that persons who occupy certain positions, as judges, jurors, advocates, or litigants, should be perfectly free and independent, and that to secure their independence, their utterances should not be brought before civil tribunals for inquiry on the mere allegation that they are malicious. The rule exists, not because the malicious conduct of such persons ought not to be actionable, but because, if their conduct were actionable, actions would be brought against them in cases in which they had not spoken falsely and maliciously: it is not a desire to prevent actions from being brought in cases where they ought to be maintained, but the fear that if the rule were otherwise, numerous actions would be brought against persons who were acting honestly in the discharge of duty. See also: Dechant v. Stevens, 2001 ABCA 39, [2001] A.J. No. 172 (C.A.) (Q.L.), per Conrad J.A., at para.33.

[21] Complaints to quasi‑judicial regulatory authority have been protected by absolute privilege as in the following cases:

• Sussman v. Eales, [1986] O.J. No. 317 (C.A.) a letter of complaint to the Royal College of Dental Surgeons;

• Hamalengwa v. Duncan, 2005 33575 (ON CA), [2005] O.J. No. 3993 (C.A.) a letter of complaint to the Law Society of Upper Canada;

• Hung v. Gardiner, 2003 BCCA 257, [2003] B.C.J. No. 1048 (B.C.C.A.) the sending of a report to the British Columbia Certified General Accountants Association.

[22] In order to determine if absolute privilege applies to the letters in question, it is necessary to determine if the Superintendent in Bankruptcy is a quasi‑judicial body. The Superintendent of Bankruptcy exercises disciplinary powers over trustees in bankruptcy. Section 10 of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended provides for an investigatory process which could give rise to a reporting to the Attorney General of the province concerned:

10. (1) If, on information supplied by an official receiver, trustee or other person, the Superintendent suspects, on reasonable grounds, that a person has, in connection with any estate or matter to which this Act applies, committed an offence under this or any other Act of Parliament, the Superintendent may, if it appears to the Superintendent that the alleged offence might not otherwise be investigated, make or cause to be made any inquiries or investigations that the Superintendent considers appropriate.

As part of that investigation, the Superintendent is given, by s. 10(2), the power to conduct examinations under oath.

[23] Further to the power to investigate, the Bankruptcy and Insolvency Act affords to the Superintendent the power to discipline. Section 14.01 of the Act provides:

14.01 (1) If, after making or causing to be made an inquiry or investigation into the conduct of a trustee, it appears to the Superintendent that

(a) a trustee has not properly performed the duties of a trustee or has been guilty of any improper management of an estate,

(b) a trustee has not fully complied with this Act, the General Rules, directives of the Superintendent or any law with regard to the proper administration of any estate, or

(c) it is in the public interest to do so,

the Superintendent may do one or more of the following:

(d) cancel or suspend the licence of the trustee;

(e) place such conditions or limitations on the licence as the Superintendent considers appropriate including a requirement that the trustee successfully take an exam or enrol in a proficiency course;

(f) require the trustee to make restitution to the estate of such amount of money as the estate has been deprived of as a result of the trustee’s conduct; and

(g) require the trustee to do anything that the Superintendent considers appropriate and that the trustee has agreed to.

Application to former trustees

(1.1) This section and section 14.02 apply, in so far as they are applicable, in respect of former trustees, with such modifications as the circumstances require.

Delegation

(2) The Superintendent may delegate by written instrument, on such terms and conditions as are therein specified, any or all of the Superintendent’s powers, duties and functions under subsection (1), subsection 13.2(5), (6) or (7) or section 14.02 or 14.03.

Notification to trustees

(3) Where the Superintendent delegates in accordance with subsection (2), the Superintendent or the delegate shall

(a) where there is a delegation in relation to trustees generally, give written notice of the delegation to all trustees; and

(b) whether or not paragraph (a) applies, give written notice of the delegation of a power to any trustee who may be affected by the exercise of that power, either before the power is exercised or at the time the power is exercised.

Notice to trustee

14.02 (1) Before deciding whether to exercise any of the powers referred to in subsection 14.01(1), the Superintendent shall send the trustee written notice of the powers that the Superintendent may exercise and the reasons why they may be exercised and afford the trustee a reasonable opportunity for a hearing.

Summons

(1.1) The Superintendent may, for the purpose of the hearing, issue a summons requiring and commanding any person named in it

(a) to appear at the time and place mentioned in it;

(b) to testify to all matters within their knowledge relative to the subject matter of the inquiry or investigation into the conduct of the trustee; and

(c) to bring and produce any books, records, data, documents or papers — including those in electronic form — in their possession or under their control relative to the subject matter of the inquiry or investigation.

Effect throughout Canada

(1.2) A person may be summoned from any part of Canada by virtue of a summons issued under subsection (1.1).

Fees and allowances

(1.3) Any person summoned under subsection (1.1) is entitled to receive the like fees and allowances for so doing as if summoned to attend before the Federal Court.

Procedure at hearing

(2) At a hearing referred to in subsection (1), the Superintendent

(a) has the power to administer oaths;

(b) is not bound by any legal or technical rules of evidence in conducting the hearing;

(c) shall deal with the matters set out in the notice of the hearing as informally and expeditiously as the circumstances and a consideration of fairness permit; and

(d) shall cause a summary of any oral evidence to be made in writing.

Record

(3) The notice referred to in subsection (1) and, where applicable, the summary of oral evidence referred to in paragraph (2)(d), together with such documentary evidence as the Superintendent receives in evidence, form the record of the hearing and the record and the hearing are public, unless the Superintendent is satisfied that personal or other matters that may be disclosed are of such a nature that the desirability of avoiding public disclosure of those matters, in the interest of a third party or in the public interest, outweighs the desirability of the access by the public to information about those matters.

Decision

(4) The decision of the Superintendent after a hearing referred to in subsection (1), together with the reasons therefor, shall be given in writing to the trustee not later than three months after the conclusion of the hearing, and is public.

Review by Federal Court

(5) A decision of the Superintendent given pursuant to subsection (4) is deemed to be a decision of a federal board, commission or other tribunal that may be reviewed and set aside pursuant to the Federal Courts Act.

[24] The disciplinary functions of the Superintendent of Bankruptcy and its quasi‑judicial procedures were discussed in the decision of Sztern v. Canada (Attorney General), [2010] F.C.J. No. 210 (Fed. Crt.) where Boivin J. stated at para. 56:

56 The Superintendent of Bankruptcy is appointed by the Governor in Council and is responsible for supervising the administration of all estates and matters to which the Act applies. The Act provides the Superintendent with powers related to the licensing and supervision of trustees in bankruptcy and allows the Superintendent to investigate complaints from the public concerning trustees. If deficiencies are found in their conduct, the Superintendent has the ability to impose disciplinary sanctions on a trustee (sections 14.01 and 14.02 of the Act).

[25] In this case, the OSB’s first letter of response notes its statutory responsibility to receive and record all complaints from any creditor or other person interested in any estate. (emphasis added.) As such, the fact that Symons was not a creditor is not fatal. Although the OSB dismissed the complaint, I conclude that the Plaintiffs have taken a statement from the Superintendent’s letter of February 23, 2011 that it had “no authority” out of context. The issue of a possible conflict was not dismissed outright by the OSB; it advised that the issue of conflict should have been raised at the meeting of the creditors. In fact, the Minutes of the Fifth Meeting of Inspectors held on April 15, 2011 and attached to Mr. Doyle’s affidavit disclose:

Mr. Doyle advised that the OSB has requested that the Trustee bring a motion of a declaratory nature to the court as a safeguard measure to state that there is no transgression of Section 13.3(1)(a). Further, if there is an appearance of conflict that the court find no fault with the conduct of the Trustee and Mr. Macaskill.

[26] DSI recognizes the seriousness of a complaint to the OSB in its own pleading at para. 43:

DSI state that the allegations and false statements made by Symons are of a most serious nature and constitute a completely unfounded and vicious attack upon the integrity of DSI, its employees and associates. Moreover, the allegations and false statements have compromised the business of DSI, the employment of staff members, its ability to obtain and renew licensing, its reputation within the industry, and thus its ability to obtain clients, and, in particular, its most important working relationship with the OSB.

[27] Similar statements about the impact of the statements on DSI’s ability to continue as a trustee in “good standing” are found in paras. 47, 48, 49 and 50. I am satisfied that all statements made by Symons to the OSB about the Plaintiff DSI are protected by absolute privilege and their claims against Symons with respect to the letters of complaint cannot be maintained and are struck. It is the occasion of the communication itself which results in the protection of absolute privilege (i.e. the making of a complaint to a quasi‑judicial body), and it does not matter whether the complaint was successful or rejected; the protection of absolute privilege remains.

[28] In this case, the Superintendent noted that Macaskill was not a “trustee” in the context of the Act. The OSB noted that Mr. Macaskill is self‑employed and submits his invoices to the trustee. Nevertheless, the Plaintiffs themselves specifically plead the close relationship between Macaskill and DSI at para. 4:

The Plaintiff David Macaskill (“Macaskill”), is an individual residing in the Province of Ontario. Macaskill is a self‑employed financial consultant with an office in Manotick, Ontario. Macaskill has been an associate of OSI (and predecessor firms) for over twenty (20) years and has performed work on various bankruptcy, receivership and proposal files for DSI from time to time. At all material times, Macaskill was assisting DSI in the estate administration of 1he Sedberg School Association/Association de l’école Sedberg (the “School”).

Since Macaskill is not a “trustee”, are the statements made to the Office of the Superintendent protected by absolute privilege?

[29] This issue involves an examination of the law of absolute privilege to determine if it is so comprehensive that it covers statements made about third parties. A good summary of the case law that has addressed this question is found in Wilson v. Switlo, 2011 BCSC 1287, which states:

389 As referred to earlier, Brown states that absolute privilege is "liberally construed". Indeed, for the policy reasons stated above, absolute privilege applies even to statements that are "totally and knowingly false, spoken with mala fide and with actual malice," (Brown at 12-50).

390 As the defendants note, Brown further states that the ambit of absolute privilege covers statements that are "irrelevant to all the issues in the judicial proceeding." (Brown at 12-50).

391 However, there is Canadian appellate authority for the Plaintiffs' position that absolute privilege does not protect irrelevant, gratuitous statements about third parties.

392 In M.J.M., the Saskatchewan Court of Appeal considered whether a statement of claim filed by the husband and alleging defamation against his wife should be struck as showing no reasonable cause of action. The statements in issue were made by the defendant against her husband as part of a complaint letter to the Law Society regarding the conduct of her husband's lawyer.

393 At para. 9, Jackson J.A. framed the inquiry in this way: "The question of law is whether policy reasons support a claim of absolute privilege with respect to such statements." Justice Jackson then addressed whether the policy considerations behind absolute privilege apply to irrelevant statement about third parties, stating at para. 10:

A major difference between statements made against the person about whom the complaint is made and a third party is the latter has no remedy within the complaint process. If a complaint is falsely and maliciously made against someone, it will ultimately be dealt with by the decision maker and found to be so. The person against whom the groundless complaint is made has the means to vindicate himself or herself by being found blameless. For example, with respect to the complaint filed against the husband's lawyer in this case, the Law Society found the complaint to be totally without merit. The process preserved the lawyer's reputation. Similarly, in a law suit, if a plaintiff makes libellous statements against the defendant, he or she can apply to have the statement struck, may be able to pursue remedies in costs and, potentially, commence an action for malicious prosecution. Perjury and contempt also remain as possible avenues to protect the reputation of the defendant. But when one makes a statement falsely and maliciously against one who is not a party to the proceedings, no such remedy exists if absolute privilege protects the maker.

394 Although the court's task in M.J.M. was limited to determining whether it was "plain and obvious" that the statement of claim disclosed no reasonable cause of action, the issue of irrelevant, gratuitous statements about third parties came squarely before the Saskatchewan Court of Appeal in Duke v. Puts, 2004 SKCA 12.

395 The statements in question in Duke formed part of a complaint to the College of Physicians and Surgeons. The court determined that absolute privilege did not cover statements that were not made with reference (construed broadly) to the proceedings or to the complaint against the doctor in question. As a result, the court found several statements that contained gratuitous and irrelevant allegations about a third party were not protected by absolute privilege.

396 In light of the considerations expressed in M.J.M. and applied in Duke, I am satisfied that absolute privilege does not extend to irrelevant, gratuitous statements about third parties.

[30] Based on the case law, it appears necessary to analyze whether the statements made in the complaint to the Superintendent of Bankruptcy about Macaskill have a sufficient nexus to the complaint about DSI to afford it absolute privilege.

[31] The Duke v. Puts decision referred to above, involved an appeal of Dr. Puts from a finding of defamation on the grounds that the letter of complaint sent to the College of Physicians and Surgeons was protected by absolute privilege. Dr. Puts had sent a letter of complaint to the College of Physicians and Surgeons about Dr. Jones and in the process made defamatory statements about Mr. Duke, a pharmacist. Mr. Duke sued for defamation (among other things). Dr. Puts did not appeal the finding that the statements were defamatory or that they were made maliciously but asserted absolute privilege.

[32] The Court of Appeal analyzed the defence of absolute privilege and the policy reasons surrounding it. It held that, “there is authority for the proposition that although comments made in the context of judicial or quasi‑judicial proceedings need not be relevant in the sense that they contribute to the resolution of the matter they must have some nexus or be connected to the proceedings.” To determine whether the statements made about Mr. Duke in the complaint about Dr. Jones were privileged, the court broke up the complaint into three parts:

o Portions about Dr. Jones on the occasion of the complaint (absolute privilege);

o Portions about Mr. Duke which were made with reference to the inquiry (absolute privilege);

o Statements that were gratuitous or irrelevant with no reference to the inquiry (defamatory and no privilege).

[33] The court then analyzed each statement against these parts to determine if the statements were covered by absolute privilege. The court found that out of the eight paragraphs highlighted as potential defamatory statements against Mr. Duke, three were covered by absolute privilege and the rest were defamatory with no privilege. Thus, this case shows that not all statements made in a letter of complaint are covered by privilege if they are about a third party with no nexus to the complaint.

[34] In Rybachuk v. Dyrland, 2007 MBQB 305, 222 Man. R. (2d) 131, that court analyzed both M.J.M. v. D.J.M and Duke v. Puts and states that “[a]ssuming for the purpose of this motion, the most favourable interpretation of the law for the plaintiff, that is that the law as set out in the two Saskatchewan cases is the law in Manitoba, the question in my view is whether the impugned statements can be said to have no nexus or connection to the proceedings.” The court found the statements to have a connection to the proceedings so they were privileged. The court also noted that a third party in custody litigation may not be as vulnerable as third parties in other kinds of litigation. This is because it is likely in the interest of the party that the third party is being associated with to refute the allegations on their behalf.

[35] The test is one of nexus to the complaint. Here, Mr. Macaskill was integrally involved in the events as an associate of DSI and the Statement of Claim says so explicitly at para. 4. The Plaintiffs make no attempt to differentiate themselves in either version of their pleadings. Paragraph 35 of the Statement of Claim pleads that any comment about Mr. Macaskill is a comment about DSI.

These complaints are scurrilous, mischievous and without any foundation and are libellous to both Macaskill (against whom these claims are specifically levelled) and DSI (who is alleged to be complicit and abetting).

[36] Their counsel repeated this in argument. I am satisfied that the necessary nexus is established in this case and that absolute privilege applies to comments made about both Plaintiffs and that the original Statement of Claim should be stuck as disclosing no reasonable cause of action.

Should the Plaintiffs be remitted to amend their Statement of Claim?

[37] The Plaintiffs rely on the well established principle that “[a]mendments to a pleading are to be granted unless the claim is clearly impossible of success”.[^2] The amendments refer to oral statements made to Jean Schnob and Benoit Groulx that were discovered when the Plaintiffs relied on s. 163 of the Act to examine Messrs. Schnob and Groulx. Symons alleges that the Plaintiffs could no longer rely on s. 163 because all of the property of the insolvent School had been sold by the time that the summonses had been served. Section 163 provides:

163. (1) The trustee, on ordinary resolution passed by the creditors or on the written request or resolution of a majority of the inspectors, may, without an order, examine under oath before the registrar of the court or other authorized person, the bankrupt, any person reasonably thought to have knowledge of the affairs of the bankrupt or any person who is or has been an agent or a mandatary, or a clerk, a servant, an officer, a director or an employee of the bankrupt, respecting the bankrupt or the bankrupt’s dealings or property and may order any person liable to be so examined to produce any books, documents, correspondence or papers in that person’s possession or power relating in all or in part to the bankrupt or the bankrupt’s dealings or property.

[38] I note that the Plaintiff DSI examined Messrs. Schnob and Groulx after Symons had served a Notice of Motion to strike out the original Statement of Claim and while a motion to quash a summons served on another third party was pending. In his affidavit, Mr. Doyle says that these examinations were conducted as a result of information received from a Mr. Hartley, the President of Sedberg School. The Minutes of the Fifth Meeting of Inspectors cited above disclose otherwise:

Mr. Doyle further stated that Mr. Symons has called the auditors more than once. The auditors have corresponded with Mr. Symons and revealed information to him. Mr. Symons may have mispresented his position. The Auditors may be in breach of the rule of confidentiality. The auditors advised Mr. Hartley that they have deleted an email to Mr. Symons and will not produce it. Further, we wish to know the involvement of Mr. Symons in the opposition of the sale to Vipassana which cost the Estate an estimated $35,000. Messrs. Greene & Ross of Students on Ice may have this information.

[39] At the examination of Mr. Schnob, counsel for DSI stated the goal of the examination as “trying to get an idea of what you know about Sedberg School Association, how you came to become aware of Sedberg School Association and its affairs, financial activities, and the people you either contacted or were contacted with regard to their affairs”. It is difficult to understand how this examination complies with s. 163 in seeking “knowledge of the affairs of the bankrupt or any person who is or has been an agent or a mandatary, or a clerk, a servant, an officer, a director or an employee of the bankrupt, respecting the bankrupt or the bankrupt’s dealings or property”. In fact, the Defendant argues, with reason, that the focus of the questions asked of Messrs. Schnob and Groulx on their examinations was their communications with the Defendant. The transcripts of those examinations have been produced.

[40] When asked if Mr. Symons mentioned specific people in his communications, Mr. Schnob’s evidence was as follows:

Q. Did he mention specific people--

A. Yes, Mr. Macaskill.

Q. -- that were in a conflict of interest? Mr. Macaskill was in conflict of interest?

A. Specifically.

Q. Did he mention Brian Doyle was in a conflict of interest?

A. No.

Q. No?

A. No.

Q. Did he mention Paul Salewski was in conflict of interest?

A. No.

Q. Did he mention Tim Hartley was in conflict of interest?

A. No. He mentioned Mr. Macaskill was and I didn’t know why because I didn’t know Mr. Macaskill worked--again I don’t know even now that he worked for Doyle Salewski. ...

[41] Mr. Groulx gave evidence that the Defendant had contacted him with questions about the audit being conducted of the Sedberg School. Mr. Groulx’s evidence was that he spoke to the Defendant twice. When asked what he was told by the Defendant about an alleged conflict, Mr. Groulx’s evidence was as follows:

Q. Did he explain to you what he meant by there was a conflict of interest with the sale?

A. He talked about Mr. Macaskill being involved with Doyle Salewski and with the sale and in the fact that he was responsible to provide us with information for the audit. Yes, that is pretty much the only thing and with the fact that he was involved with Doyle Salewski and the sale there was potentially a conflict there.

Q. Did he explain to you what he meant by potentially a conflict?

A. Not in detail, no, and to be honest I really didn’t want to get involved too much so I didn’t.

[42] When asked if the Defendant ever mentioned Brian Doyle during his communications with Mr. Groulx, his evidence was as follows:

Q. In your conversations with Mr. Symons did Mr. Doyle’s name ever come up to your recollection?

A. The firm Doyle Salewski came. I am not sure if he specifically talked about Mr. Doyle himself.

[43] Mr. Groulx gave no evidence of any statements made to him by the Defendant regarding Doyle Salewski.

[44] Our Divisional Court[^3] has held that the court is entitled to inquire into the merits of a proposed amendment to ensure that it at least meets a basic threshold. Where the amendment does not meet the threshold of “legal soundness”, it is not necessary for the party opposing the amendment to prove prejudice.

[45] The amendments sought by the Plaintiffs are essentially broken down as follows:

(a) in para. 18, that the Defendant contacted Raymond Chabot and requested information;

(b) in para. 20(d), that the Defendant contacted Raymond Chabot and requested information;

(c) in para. 20(f), that the Defendant contacted Raymond Chabot and requested information;

(d) in para. 33, that false and defamatory statements were made to Mr. Schnob and Mr. Groulx with respect to the Plaintiffs; and

(e) in para. 41, that the Defendant contacted Raymond Chabot and requested information and that he contacted Mr. Groulx and told him that there was some conflicts of interest regarding the sale transaction.

[46] In and of itself, a request for information cannot give rise to a cause of action in defamation. The only proposed amendments which could potentially be legally tenable are those in para. 33. There, the Plaintiffs seek to allege that the Defendants made statements to Messrs. Schnob and Groulx concerning the Plaintiffs that:

(a) were defamatory;

(b) were made for the express purpose of causing:

(i) damage and loss to the Plaintiffs;

(ii) a disruption of a court approved sale;

(iii) Doyle Salewski’s ability to carry out and discharge its duties and responsibilities as Trustee of the estate of the School and as officers of the court; and

(iv) diminution of the reputations of the Plaintiffs in their respective professions.

[47] In considering the evidence of Messrs. Schnob and Groulx, which purportedly forms the basis for seeking the amendment, it is clear that a statement that Mr. Macaskill may be in a conflict of interest cannot be construed to have the defamatory meaning claimed by the Plaintiff DSI. There is no mention of DSI notwithstanding all of the prodding by its counsel.

[48] In this regard, the proposed amendment contains another fatal flaw. The amended pleading merges the allegations of slander allegedly made to Messrs. Schnob and Giroux along with the allegations of libel made in the letters to the OSB. The proposed amended paragraph reads as follows:

More particularly, Symons made certain false and defamatory statements concerning the Plaintiffs to third parties (the OSB and Groulx and Schnob of Raymond Chabot, among others) for the express purpose of causing: i) damage and loss to the Plaintiffs, ii) a disruption of a court approved sale; iii) DSI’s ability to carry out and discharge its duties and responsibilities as Trustee of the estate of the School and as officers of the court; and iv) diminution of the reputations of the Plaintiffs in their respective professions, particulars of which include: … (underlining in original)

[49] The statement that Macaskill may be in a conflict of interest is not in and of itself defamatory unless the context is pleaded. Here that context is to be found in the letters written to the OSB and in other events and it has not been pleaded that either Messrs. Groulx or Schnob had any knowledge of those events or of the letters to the OSB. I have already concluded that the letters of complaint directed to the OSB are protected by absolute privilege and the Plaintiffs cannot rely on those.

[50] All that remains are the amendments that refer to the communications between Symons and Messrs. Schnob and Groulx. Those words in and of themselves cannot be construed by their ordinary meaning to be defamatory in any way of the Plaintiff DSI nor can the bare allegation that Macaskill was in a conflict of interest be considered defamatory of Macaskill. Something more must be pleaded with regard to those communications.

[51] In this context, I am satisfied that leave to amend the Statement of Claim should be refused without leave to the Plaintiffs to seek a further amendment. Faced with a Motion to Strike an original Statement of Claim, the Plaintiffs sought out further evidence to support their claims and even then, were unsuccessful in drafting an acceptable pleading. It would be tantamount to an abuse of process to allow them a further opportunity to seek an amendment.

[52] The Defendant having been successful, I invite him to make brief submissions as to costs within 20 days of the release of this decision. The Plaintiffs are to respond within a further 20 days. A reply may be delivered within 10 days.

Mr. Justice Robert N. Beaudoin

Released: January 9, 2012

CITATION: Salewski v. Symons, 2012 ONSC 236

COURT FILE NO.: 11-50861

DATE: 2012/01/09

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

DOYLE SALEWSKI INC. and DAVID MACASKILL

Plaintiffs

– and –

JAMES IVOR SYMONS (aka IVOR SYMONS, JAMIE SYMONS, JAMES SYMONS)

Defendant

REASONS FOR DECISION

Beaudoin J.

Released: January 9, 2012

[^1]: Web Offset Publications Ltd. v. Vickery (1998) 14858 (O.S.C.) at paras. 17 to 23 upheld on appeal 1999 4462 (On C.A.). [^2]: Plante v. Industrial Alliance Life Insurance Co., 2003 64295 (ON SC), [2003] O.J. No. 3034 (Ont. Sup. Crt.) at para. 21. [^3]: Daniele v. Johnson, 1999 19921 (ON SCDC), [1999] O.J. No. 2562 (Div. Ct.), paras. 13 and 15.