SUPERIOR COURT OF JUSTICE - ONTARIO
RE: Conrad Black, Plaintiff
– AND –
Random House of Canada Limied, Ken Alexander, Anne Collins, Craig Pyette, and Bruce Livesey, Defendants
BEFORE: Justice E.M. Morgan
COUNSEL:
David A. Potts, for the Plaintiff
Brian MacLeod Rogers, for the Defendants
HEARD: February 11, 2014
ENDORSEMENT
[1]
Overview
This motion under Rule 21 of the Rules of Civil Procedure relates to a libel action that the Plaintiff has brought against the author, publisher, and editors of the book, Thieves of Bay Street: How Banks, Brokerages and the Wealthy Steal Billions from Canadians (“Thieves”). The Plaintiff seeks to strike 36 paragraphs and subparagraphs in the Amended Statement of Defence as being contrary to either a rule of pleadings or to a substantive requirement of libel law.
2Thieves is a lengthy narrative dealing with, inter alia, the criminal charges and allegations made against the Plaintiff in respect of his dealings at Hollinger International Inc., where he had been Chairman, CEO and controlling shareholder. The Plaintiff, in his Further Amended Statement of Claim, focuses his complaint on five brief passages in the book. The passages identified by the Plaintiff as defamatory are set out in his pleading as follows:
- …at pg. 23:
‘In April 2001, Fox telephoned Herbert Denton, whose New York-based investment firm, Providence Capital, also owned Hollinger International stock, and told him to ‘take a deeper look at Hollinger.’ Denton put an analyst on the matter, and when his report came back, Dento told Fox that he thought Black was ‘taking $60 million a year out of the company.’
- …at pg. 24:
‘In August 2004, the special committee submitted a voluminous 513-page report to the SEC and Illinois courts detailing what the committee found Black and his top associates had been up to. Famously, the report clais tha the men not only looted the company but created a ‘corporate Kleptocracy.’’
- …at pgs. 24-25:
‘The fact that the security guard is asleep does not mean you can rob the bank,’ explains Eric Sussman. ‘Black knew the directors were not paying attention.’
- …at pg. 230:
‘Moreover, the OSC regularly stands aside and allows American authorities to prosecute Canadian corporate criminals, again such as Conrad Black.’
- …at page 5:
‘Over the two decades leading up to the crisis, the number of investment fraud stories had indeed been piling up – from Bre-X to Conrad Black…YBM Magnex, Portus, Norshield, Livent…and rogue brokers including Ian Thow and Harry Migirdic…’
[3]
Analysis
The Defendants rely on what has become known in Ontario as the Pizza Pizza defense – i.e. “that a defendant is permitted to plead any defamatory meaning of the words in question which those words are capable of bearing for the purpose of pleading and proving that in such meaning the words are true or fair comment”: Pizza Pizza Limited v Toronto Star Newspapers Ltd. (1998), 1998 18866 (ON CA), 42 OR (3d) 36, at para 13. Counsel for the Defendants asserts that this is a recognized defense to a libel action, and that it therefore cannot be said that it is “plain and obvious” that the Defendants’ position will fail: Hunt v. Carey Canada Inc., 1990 90 (SCC), [1990] 2 SCR 959, at para. 30.
4In the Amended Statement of Defence, the Defendants raise a large portion of the narrative found in Thieves. Their pleading goes into numerous details described in the book, justifying this approach as an effort to put the complained of passages in context. Defendants’ counsel relies on the British Columbia Court of Appeal’s decision in Casses v CBC, 2013 BCCA 200, at para 6, for the proposition that the Defendants cannot be cut short and must be given the opportunity to provide a full explanation for their position.
5Plaintiff’s counsel concedes that Pizza Pizza follows the English Court of Appeal’s reasoning in Polly Peck (Holdings) plc v Trelford, [1986] 2 All ER 84, at 102, where it was held that, “the defendant is entitled to look at the whole publication in order to aver that in their context the words bear a meaning different to that alleged by the plaintiff. The defendant is entitled to plead that in that meaning the words are true and give particulars of the facts and matters on which he relies in support of his plea.”
6Plaintiff’s counsel argues, however, that there are limits to the defense of truth and the use of “context” as authorized in the Pizza Pizza decision. He further submits that these limitations impact on the pleadings and must be factored into the analysis on a Rule 21 motion, since a pleading that purports to raise a defense that cannot succeed at law is improper and must be struck.
7In the first place, Pizza Pizza imposes limitations on what the Defendants may plead in terms of the meaning of the allegedly defamatory. The Defendants may not plead a non-defamatory meaning. Further, they may not assert the truth of a different defamatory statement than the one on which the Plaintiff has sued: Khashoggi v IPC Magazines Ltd., [1986] 3 All ER 577, at 581 (Eng CA).
8In addition, the Defendants may not plead a violation of the repetition rule – i.e. they may not justify the defamatory words with an assertion that they merely repeat what was said by others: Shah v Standard Charter, [1998] EWCA Civ 612 (CA). Likewise, the pleading rules in a libel action prohibit the Defendants from asserting that the Plaintiff has engaged in worse conduct than that described in the passages identified as defamatory in the claim; likewise, the Defendants may not plead in a way designed “to colour the readers’ (the trier of fact) reaction” by tarring the Plaintiff’s reputation: Kaloe v McClelland & Stewart, 2007 17031, at para 25.
9In the second place, as the Divisional Court said in Asper v Lantos (1999), 1999 15102 (ON SC), 46 OR (3d) 238, at para 17-18 (SCJ), “the court…retains jurisdiction ‘to protect the Plaintiff from unfairness or oppression’…[and] has had and continues to have jurisdiction to strike a pleading even where it is relevant, where its probative value is outweighed by its prejudicial effect.” This submission by the Plaintiff builds on the Divisional Court’s comment in Pizza Pizza, at para 20, that “where a plea is strictly speaking relevant, but of marginal probitive value, and would be onerous for a Plaintiff, it may well be found to offend the Rules.”
10Counsel for the Defendants states, correctly, that under the guise of a Rule 21 motion the Plaintiff cannot seek an advanced ruling on admissibility of evidence: Slegers v Sullivan, 2009 6637, at para 7. The Defendants also submit that their own free speech is at issue in this libel action, and that they must be at liberty to tell their own side of the story. The Court noted in Asper, at para 19, that “it is the duty of the court to consider not only whether the plea offends Rule 25.11 and is, thereby, unfair to a Plaintiff, but also whether it is relevant and necessary to the defendant's effort to justify the meaning it has alleged.”
11I must be cognizant that, as the Divisional Court said in Pizza Pizza, at para 22, “the interests of efficiency of discovery and trial carry little weight if achieved at the price curtailing the right of a party from presenting its entire case.” Moreover, a pleadings motion is not generally the time and place to curtail discovery unless the impugned pleading contains material that is patently oppressive or disproportionate to the claim.
12That said, courts in recent times have been vigilant to ensure that pleadings not be designed to require the opponent’s disclosure of unwieldy “metadata” or to signal the prospect of “massive discovery”: Warman v National Post, 2010 ONSC 3670, at paras 50, 62 (Ont Master). Thus, while the Defendants have a right to provide a contextualized meaning to the impugned words, the Amended Statement of Defence must not be fashioned to cause the discovery stage of the action to descend into “uncontrolled and wide-ranging investigations akin to public inquiries, where that is not necessary to determine the real issues between the parties”: Gatley on Libel and Slander (London: Sweet & Maxwell, 11th ed.), at 328.
13Accordingly, assessing a pleading in a libel action is an exercise in balancing the rights of the parties. The Defendants must be permitted to assert their own meaning of the impugned words – keeping in mind the limitations imposed by libel law on pleading non-defamatory meanings, on repeating the libel, or on justifying other defamatory words that are not the subject of the claim. At the same time, the Plaintiff is entitled to choose what to sue over, and the Defendants cannot plead particulars in a way which makes discovery oppressive and disproportionate to the Plaintiff’s claim.
[14]
Rulings on Specific Paragraphs
It is in the nature of a motion such as this one that the specifically impugned portions of the pleading must be reviewed one by one. The following sentences in the Amended Statement of Defence violate one of the principles mentioned above:
Para 3, 4th sentence – pleading of a new libel; tarring the Plaintiff’s reputation by pleading worse conduct than the libel complained of by the Plaintiff.
Para 10, last sentence – repetition of a libel; pleading of a new libel.
Para 11, second sentence – repetition of a libel; pleading of a new libel; pleading in a way designed to tar the Plaintiff’s reputation.
Para 22 (v) – pleading of worse conduct than that complained of by the Plaintiff.
Para 22 (ix) – pleading of a new libel; repetition of a libel.
Para 22 (x) – oppressive pleading leading to near limitless discovery of the “advantageous” nature of the transactions.
Para 22 (xi) – oppressive pleading leading to near limitless discovery of Plaintiff’s business dealings.
Para 22 (xiv) – pleading of new libels; repetition of a libel; improper attack on a non-party.
Para 22 (xvi) – pleading of new libels; repetition of libels; pleading of worse conduct that that complained of by the Plaintiff.
Para 22 (xx), final quotation – repetition of libel; pleading of new libel.
Para 22 (xxii) – oppressive and disproportionate pleading designed to lead to near limitless discovery; prejudice far outweighs relevance.
Para 22 (xxiii) – pleading of new libels; repetition of libel.
Para 22 (xxiv), last bullet point – pleading of new libel; improper attack on a non-party.
Para 22 (xxv) – oppressive and disproportionate pleading requiring near limitless discovery of Hollinger International business.
Para 22 (xxvi) – repetition of libel.
Para 23 (ii) – oppressive pleading leading to near limitless and disproportionate discovery.
Para 23 (v) – repetition of libel.
Para 23 (vii) – oppressive pleading leading to near limitless and disproportionate discovery.
Para 23 (viii) – improper pleading of new libels; pleading of worse conduct than that complained of by the Plaintiff.
Para 23 (xii) – must eliminate reference to improper subparagraphs in para 22 noted above.
Para 24 (i) – must eliminate reference to improper subparagraphs in paras 22 and 23 noted above.
Para 26 (ii) – pleading of new libels.
Para 28, first sentence up to words “Special Committee Report” – oppressive pleading leading to near limitless and disproportionate discovery.
[15]
Disposition
The above portions of the Amended Statement of Defence are struck out (or, in the case of paras 23 (xii) and 24 (i), modified as noted). Given the substantial changes required in the Amended Statement of Defence, the Defendants shall have leave to further amend their pleading in order to ensure that the revised version has narrative coherence. Any further amended pleading, however, must comply with the principles set out herein. The Defendants are not at liberty to add new “context” which effectively repeats libels, or references new libels, or merely colours the pleading by tarring the Plaintiff’s reputation; likewise, the Defendants are not at liberty to amend their pleading in a way that is designed to prompt disproportionate discovery.
[16]
Costs
Of the 36 subparagraphs of the Amended Statement of Defence challenged by the Plaintiff in this motion, 23 have been struck and 13 have been left intact. As this is a mixed result, there will be no costs of this motion for or against either party.
Morgan J.
Date: April 14, 2014