Court File and Parties

COURT FILE NO.: CV-22-875 DATE: 2023-04-21 ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Mauro Malandruccolo Plaintiff – and – 401 Auto RV Canada Inc. Defendants

Counsel: Stephen LeMesurier for the Plaintiff (Responding Party) Peter Carey and Maria Belykh for the Defendant (Moving Party)

HEARD: March 29, 2023, by videoconference the Honourable justice I.R. SMITH

Reasons on Motion

Introduction

[1] Among other things, the claim in this action alleges defamation. The defendant corporation moves, pursuant to rules 21.01(1)(b) and 25.11 of the Rules of Civil Procedure, R.R.O. 1990 Reg. 194, to strike portions of the amended statement of claim because it discloses no reasonable cause of action, having (1) failed to particularize the claim of defamation and (2) rested the claim of defamation on statements protected by absolute privilege.

[2] For the reasons which follow, the relief sought by the moving party is granted.

Background

[3] The defendant is in the business of selling motor vehicles. The plaintiff was employed by the defendant as a business manager and claims wrongful dismissal. He says that after he was dismissed by the defendant he set about obtaining new employment from another automobile dealer and received a conditional offer of employment. He then learned from the Ontario Motor Vehicle Industry Council (“OMVIC”), which administers and enforces the Motor Vehicle Dealers Act, 2002, S.O. 2002, C.30, that, to quote the amended statement of claim, “his registration could not be renewed as a result of undisclosed information communicated by the Defendant to OMVIC.”

[4] The plaintiff then pleads that when he sought an explanation from the defendant, it responded by advising that it had conducted an “internal investigation” and had “communicated to OMVIC that customers complained about [the plaintiff] relating to ‘breaches of the OMVIC Code of Ethics.’” The plaintiff adds that he “denies that such complaints were made against him personally.” Because of the defendant’s allegedly defamatory communication to OMVIC, the plaintiff says that he is now “blacklisted” and unable to secure new employment.

[5] The plaintiff further pleads as follows:

… that the false information given by the Defendant to OMVIC contained words that in both their natural and ordinary meaning, and in their extended meaning were defamatory. The Defendant knowingly communicated statements regarding [the plaintiff’s] conduct during his employment that were false and/or misleading. [The plaintiff] denies that the customer complaints (to the extent they actually existed) were with respect to any conduct by him. The Defendant fabricated this information in whole or in part and did so with malice.

[6] Later in the claim, the plaintiff pleads that the defendant submitted false information to OMVIC in an attempt to blame him for the defendant’s own misconduct.

[7] Nowhere in the claim does the plaintiff articulate what complaints were made against him, what ethical violations he is said to have committed, or what exactly the defendant communicated to OMVIC about the customer complaints.

The positions of the parties

[8] The defendant says that the amended statement of claim does not permit a reasonable reader to know how (or even when) it is that it is said to have defamed the plaintiff. In other words, the claim is so vague that the defendant does know what case it has to meet. The defendant also says that the claim simply cannot succeed because complaints made to quasi-judicial tribunals like OMVIC are protected by absolute privilege even if they are false and even if made with malice (see Caron v. A., 2015 BCCA 47, at paras. 16 – 25).

[9] The plaintiff responds to the motion arguing that he has pleaded all that he knows about the alleged defamatory statements, including as much as he knows about when the statements were made, and that in any case the content of those statements is completely within the knowledge of the defendant which, therefore, knows exactly what case it has to meet. Relying on Hampton Securities Limited v. Dean, 2018 ONSC 101, aff’d 2018 ONCA 901, the plaintiff says that statements made by an employer about an employee to a regulator are protected by qualified privilege, not absolute privilege, and that qualified privilege may be defeated by proof of malice, which the plaintiff pleads in this case.

Discussion

[10] I do not need to consider that defendant’s argument that the amended statement of claim is vague and does not properly particularize a claim of defamation as I have come to the conclusion that the alleged complaint to OMVIC, which is the basis of the claim of defamation, is protected by absolute privilege. Therefore, as the claim of defamation cannot succeed, in this respect the amended statement of claim discloses no reasonable cause of action. Those portions of the claim which allege defamation must therefore be struck.

[11] The defendant’s argument that the amended statement of claim discloses no reasonable cause of action requires me to consider only the text of the claim itself. No evidence is admissible on this motion (rule 20.01(2)(b)).

Complaints of professional misconduct and absolute privilege

[12] In taking the position that a complaint to OMVIC is protected by absolute privilege, the defendant relies on a long line of authority, starting with the decision of the Court of Appeal in Sussman v. Eales (1986), 25 C.P.C. (2d) 7 (Ont. C.A.). At para. 1, that court wrote as follows:

In our view, the doctrine of immunity by reason of absolute privilege with respect to statements made in the course of proceedings before a statutory body, exercising disciplinary powers over a member with respect to unprofessional conduct, applies to statements made in a letter of complaint addressed to the Registrar of the Royal College of Dental Surgeons. It is a document incidental to the initiation of quasi-judicial proceedings, and it matters not that the Complaints Committee has investigatory powers which may or may not lead to a direction that the matter be referred to the Discipline Committee. A complainant in the respondent Eales' position should not be deterred by the fear of proceedings and "the vexation of defending actions". (Lincoln v. Daniels, [1962] 1 Q.B. 237, [1961] 3 All E.R. 740 at 748 (C.A.) [emphasis added].

[13] The Court of Appeal followed Sussman in Hamalengwa v. Duncan (2005), 202 O.A.C. 233 (C.A.), at para. 8, applying it to a letter of complaint sent to the Law Society of Upper Canada about the conduct of one of its members (see also Isaac v. Tinney-Fischer, 2019 ONSC 6964, at paras. 31 - 51). In Hung v. Gardiner, 2003 BCCA 257, Sussman was followed by the British Columbia Court of Appeal in a case where complaints were made to the Law Society of British Columbia and to the Certified General Accountants Association (see also Andreasen v. Malahat Nation, 2022 BCSC 363, at paras. 68 – 80, 93).

[14] In Singh-Boutilier v. Ontario College of Social Workers and Social Service Workers, 2015 ONSC 5297, at paras. 35 – 39, the court found that complaints made about a social worker to her regulator were protected by absolute privilege. In Byrne v. Maas, [2007] O.J. No, 4457 (S.C.J.), at paras. 5 – 6, absolute privilege was said to protect a complaint made under the Police Services Act, R.S.O. 1990, c. P.15.

[15] Special reference should be made to Murphy v. Sutton Group, 2019 ONSC 2078, at para. 83, where absolute privilege was found to apply to complaints made to the Real Estate Council of Ontario (“RECO”), the body charged with the regulation of real estate professionals in Ontario. RECO operates in the real estate business in the same way that OMVIC operates in the motor vehicle business. Indeed, RECO and OMVIC are both creatures of, and subject to, the same legislation, the Safety and Consumer Statutes Administration Act, 1996, S.O. 1996, c. 19.

[16] These cases provide strong authority for the proposition that a complaint made to OMVIC is protected by absolute privilege. But the plaintiff does not take the position that OMVIC is not a quasi-judicial regulatory body to which this body of case law – and the protection of absolute privilege – does not apply generally. His position is that it does not apply in the particular circumstances of this case.

Hampton Securities v. Dean

[17] In this respect, the plaintiff relies principally on Hampton Securities, supra. There, the plaintiff, a registrant in the securities industry, was dismissed from her position with Hampton. Hampton had a duty to report her departure to its regulators, the Investment Industry Regulatory Organization of Canada (“IIROC”) and the Ontario Securities Commission. The report was in the form of a notice of termination (“NOT”). The plaintiff alleged – and Koehnen J., the trial judge, accepted – that the NOT was false and defamatory insofar as it indicated that the plaintiff had been terminated because she had engaged in unauthorized trading. Hampton posted the NOT to an IIROC database accessible by any registered securities dealer in Canada, among others. Koehnen J. found that this had serious consequences for the plaintiff’s employment prospects (Hampton (S.C.J.), supra, paras. 130 – 143; 157 – 161).

[18] In its defence, Hampton said that the NOT, which it had a duty to file, was protected by the qualified privilege which attaches when the maker of a statement has an interest in making the statement and the receiver of the statement has an interest in receiving the information. Koehnen J. accepted that qualified privilege was an available defence but found that it could not succeed in that case because Hampton had acted with malice and had exceeded the limits of its duty to report by providing false information (Hampton (S.C.J.), supra, paras 173 – 179). The Court of Appeal affirmed these conclusions (Hampton (C.A.), supra, paras. 8 – 9).

[19] Before me, the plaintiff says that his case is analogous to that of the plaintiff in Hampton Securities. His employer has made a report to the relevant regulator and has done so, allegedly, falsely and with malice. It is claimed that this has had serious deleterious consequences for the plaintiff’s employment prospects.

[20] To be sure, there are a number of factual parallels between Hampton Securities and the claims made in the amended statement of claim, but I am unable to conclude that this case can be distinguished from the Sussman line of cases. The amended statement of claim clearly refers to complaints made by the defendant’s customers against the plaintiff, which complaints alleged ethical breaches and were investigated by the defendant, and that those complaints were then communicated to OMVIC, the relevant professional disciplinary body. Such a communication is protected by absolute privilege. Consider the first paragraph of the judgment of Levine J.A., of the British Columbia Court of Appeal, in Hung, supra:

At issue in this appeal is whether a person who provides information to a professional disciplinary body about the conduct of one of its members is liable in an action brought by that member. The clear answer is that the communication of the information is subject to absolute privilege, which provides a defence to all claims.

Confidentiality

[21] Despite its similarities to this case, Hampton Securities, is distinguishable. There, in the NOT Hampton was reporting a change in registration status and Hampton knew that the NOT was to be published on a widely accessible database.

[22] By contrast, in the present case, apart from reporting the complaints to OMVIC, it is not suggested that the complaints were otherwise published or communicated to anyone. The confidentiality of the complaint is an important part of the justification for permitting the defence of absolute privilege to apply. In Hung, supra, Justice Levine wrote as follows (at para. 30):

The Law Society and the CGA Association are quasi-judicial bodies and are not merely administrative in nature. They have the power to determine the legal rights and to affect the status of their members. Thus, a complaint made to them in a confidential way concerning a member’s conduct is absolutely privileged [emphasis added; see also paras. 16, 19].

[23] In coming to her conclusion in this respect, Levine J.A. referred to Sussman, supra, among other cases. The motion judge in Sussman, (see (1985), 1 C.P.C. (2d) 14 (Ont. H.C.J.)), Smith J., described the rationale for absolute privilege in these cases as follows:

It is a question of balancing two interests. The public interest should outweigh that of the individual for at least two reasons. Firstly, the immunity will only be conferred upon a citizen complaining in a confidential way to a body created by statute. A communication of that kind can hardly be said to be a publication of the kind that is apt to harm one’s reputation in the community to a degree sufficient to attract an award of compensation.

Secondly, the right to engage in professional activities must be the subject of rules governing them. These rules cannot be enforced without a corresponding right in the members of the public to complain uninhibited and without fear of being found wrong and as a result being subject to actions in defamation. Surely it is a small price for a professional person to pay [emphasis added].

[24] Importantly, two letters of complaint were sent in Sussman. As noted above, the Court of Appeal agreed with Justice Smith that the letter sent to the Royal College of Dental Surgeons was protected by absolute privilege. A second copy of the letter, however, sent to the president of the Waterloo-Wellington Dental Society, was not so protected and Smith J. erred in concluding otherwise. The Court of Appeal wrote that the second letter “constituted a publication which was not necessary or properly incidental to the initiation of the quasi-judicial proceeding.” Accordingly, at best, that communication was protected by qualified privilege. Absolute privilege had no application.

[25] In summary, a confidential communication of a complaint to a statutory body exercising disciplinary powers, as a step incidental the initiation of quasi-judicial proceedings, is protected by absolute privilege. Essentially, the amended statement of claim pleads that the plaintiff was defamed by the confidential communication of a complaint to a statutory body exercising disciplinary powers as a step incidental the initiation of quasi-judicial proceedings. The communication in Hampton Securities, by contrast, while made to a statutory body with disciplinary powers, was not a communication of a complaint (it was the filing of a notice, pursuant to a regulatory duty to do so, of a change in registration status) and it was not confidential (it was posted in a widely read database).

Indirect complaints

[26] The plaintiff makes a further attempt to distinguish the cases finding that absolute privilege applies, including those referred to above, by pointing out that the complaints in those cases were made directly to the relevant regulator by the person actually aggrieved by the impugned conduct, whereas in this case, as the amended statement of claim alleges, the complaint is said to have come from the defendant’s customers, was investigated by the defendant, and was then passed on to the regulator.

[27] I see no merit in the argument that absolute privilege should not apply where a complaint is made by someone other than the victim of the alleged misconduct. The policy considerations which underpin the application of absolute privilege – including the desire for statutory regulators to receive frank complaints about the professionals they oversee so that their rules can be enforced – apply as forcefully whether the complaint comes directly from the aggrieved party or from some other source. Victims of professional misconduct, those who witness such misconduct, and those who otherwise become aware of it, should all be encouraged to report. The law offers that encouragement by affording the protection of absolute privilege.

[28] For all these reasons, I conclude that the portions of the statement of claim which allege defamation should be struck. The communication said to be defamatory is protected by absolute privilege.

Order and costs

[29] Accordingly, paragraphs 1(c), 19, 21 (excepting the last sentence), 22, 23, 28(e), 33, 34 and 39(f) of the amended statement of claim are struck.

[30] If the parties cannot agree on costs, the defendant may serve and file brief written submissions respecting costs within 10 days of the release of these reasons. The plaintiff may serve and file brief responding submissions respecting costs within 7 days of the service of the defendant’s submission. The defendant may serve and file reply submissions, if any, within 3 days of the service of the plaintiff’s responding submissions.

I.R. Smith J. Released: April 21, 2023