CITATION: Chidley-Hill v. Daw, 2010 ONCA 835

DATE: 20101208

DOCKET: C52005

COURT OF APPEAL FOR ONTARIO

Simmons, Juriansz and LaForme JJ.A.

BETWEEN

John William Chidley-Hill

Plaintiff (Appellant/Respondent by way of cross appeal)

and

James Daw, Michael Goldbloom, Torstar Media Group and Torstar Corporation

Defendants (Respondents/Appellants by way of cross appeal)

John William Chidley-Hill, in person

Paul Schabas and Erin Hoult, for the respondents/appellants by way of cross appeal

Heard: November 10, 2010

On appeal from the judgment of Justice David M. Brown of the Superior Court of Justice dated March 16, 2010.

By The Court:

[1]         The appellant, Mr. Chidley-Hill, appeals from a summary judgment dismissing part of his action against the respondents for damages for defamation. The respondents cross-appeal, claiming that the motion judge erred in failing to dismiss the appellant’s action in its entirety.

Background

[2]         The appellant is a lawyer who acted as counsel for Triple 3 Holdings Inc., 3 Pizzas 3 Wings Limited, 3 For 1 Pizza & Wings (Canada) Inc., company president, Reza Solhi, and another corporate officer, Farzad Bagherzadeh, in an action in which franchisees of the Triple 3 companies obtained judgment against the companies and corporate officers for improperly and fraudulently terminating their franchise and reselling it.

[3]         In March 2005, the trial judge, Paisley J., found the appellant jointly and severally liable with his clients for solicitor and client costs of the action totalling $140,000.

[4]         In holding the appellant personally responsible for the costs of the action, the trial judge relied on the fact that, although not a defendant in the action, the appellant was a vice-president of one of the Triple 3 companies. The trial judge concluded that the appellant “shared a common financial interest ... with the defendants” and “had placed himself in conflict with his duty to the Court and to his clients, as he was unable to advise the clients as to their exposure to liability in this case, and the advantage of settling it, without admitting his own.”

[5]         Four months later, on July 12, 2005, the Toronto Star published an article written by the respondent, James Daw, entitled “Judge moves to aid pizza franchisees”. The first part of the article focussed on a recent decision of Farley J. to appoint an inspector to oversee one of the Triple 3 companies as a result of complaints by franchisees that company president Solhi was undermining their stores and assisting a rival chain directed by his mother. The article also stated that Mr. Solhi had been charged with 25 counts of fraud over $5,000 relating to the sale of franchises. The last five paragraphs of the article reported on the costs ruling made by Paisley J.

[6]         On September 7, 2006, this court allowed the appellant’s appeal of Paisley J.’s costs award against him, holding that the finding of a common financial interest was palpably wrong and that the appellant was not in a conflict of interest with his duty to his client or the court.

[7]         On September 12, 2006, the Toronto Star published an article written by Mr. Daw relating to the Court of Appeal decision. The article was entitled “Toronto lawyer vindicated in cost award case”.

[8]         On October 11, 2005, the appellant commenced his action claiming damages against the respondents for defamation in relation to the July 12, 2005 article. As noted by the motion judge on the summary judgment motion, the heart of the appellant’s claim is found in paras. 17-20 and 29 of the amended statement of claim:

17. The Article as published on July 12, 2005 and displayed on July 12, 2005 was defamatory of Chidley-Hill. It contained the following words:

“....Justice James Farley of the Superior Court of Justice has appointed an inspector to oversee 3 for 1 Pizza & Wings (Canada) Inc., whose founder has lost several civil lawsuits and been charged with fraud in the sale of franchises.....”

“....Solhi faces 25 counts of fraud over $5000 related to the sale of franchises, mainly to new Canadians. A preliminary hearing into the criminal charges was set to resume last month, but was adjourned until September 9....”

“Solhi told the franchisee’s lawyer, Gregory Sidlofsky, during a prehearing examination....”

“.... Farley found that Solhi ‘was incredibly evasive to even the simplest relevant questions put to him....”

“In an unusual development last March, a judge agreed to make one of Solhi’s lawyers jointly liable for $140,000 in legal costs”

“Justice Victor Paisley made the ruling several months after awarding Sidlofsky’s client Jaffer Jan, $594,000.00. He had ruled that Solhi and Bagherzadeh had fraudulently locked the Dutch immigrant out and sold his 3 for 1 Pizza franchise.”

“Paisley said in his ruling on legal costs that 3 for 1 Pizza had hired John Chidley-Hill as its vice-president and general counsel on July 11, 2001. He was to receive $160,000 a year, a private office, a luxury sedan and 1 per cent of money received from franchise sales and 10 per cent from franchise transfers.”

“Paisley said Chidley-Hill “stood to gain from his clients’ wrongdoing as it occurred, and while he was obligated to advise them as to their legal responsibilities.” That put him in a conflict, said Paisley. Chidley-Hill would have had to admit his own liability if he had advised Solhi to settle with Jan.”

“Chidley-Hill has asked the Court of Appeal for Ontario for leave to appeal. A ruling is expected soon.”

18. The Article as published and displayed had the effect of linking Chidley-Hill to Solhi and the 25 counts of fraud faced by Solhi. This aggravated Chidley-Hill’s damages. The entire Article will be put in evidence at the trial of this proceeding.

19. The Article as published and displayed had the effect of linking Chidley-Hill to Solhi’s fraudulent termination of Jaffer Jan’s franchise as found by Justice Paisley. This aggravated Chidley-Hill’s damages.

20. Particularly damaging to Chidley-Hill was the defendants’ published and displayed statement in the Article:

“...Chidley-Hill would have had to admit his own liability if he had advised Solhi to settle with Jan.

The said statement damaged Chidley-Hill. It impugned his professional integrity. It had the effect of aggravating Chidley-Hill’s damages.

...

29. In consequence of the words published and displayed, Chidley-Hill was portrayed in a manner that would damage his credibility by creating the impression that Chidley-Hill would put his own interests ahead of those of his client. He has been seriously damaged, and he has suffered distress and embarrassment. [Underlining in the original.]

The Motion Judge’s Reasons

[9]         Before the motion judge, the respondents’ primary submission was that the allegedly defamatory words contained in the July 12, 2005 article were true or “justified”.

[10]          According to the motion judge, to support their claim of justification, the respondents submitted that an exception to the “repetition rule” exists in the case of reports of an allegation or claim published by newspapers.

[11]          The repetition rule provides that if a person communicates an unadopted rumour, he or she cannot justify it – or say that it is true – merely by proving that the rumour existed.

[12]          However, the respondents submitted that an exception to that rule exists where repeated statements relate to findings by a court published in a newspaper – in such a case, the defendant need only prove that the court made the finding that was repeated.

[13]          The motion judge rejected this argument, holding that the authorities relied on by the respondents do not stand for the proposition that a newspaper can justify a report of allegations or claims in a court proceeding by proving that the allegations were made. If that were the case, the law of privilege in relation to fair and accurate reports of judicial proceedings would be redundant.

[14]          Nonetheless, the motion judge determined that, at its core, the respondents’ argument was an assertion of privilege. Relying on that assumption, the motion judge found that the last five paragraphs of the July 12, 2005 article were entitled to the benefit of common law privilege.

[15]          Although neither party had done so, in his ruling on the summary judgment motion, the motion judge divided the words of the July 12, 2005 article quoted at paragraph 17 of the appellant’s statement of claim into two categories: (i) the Cost-Order Words, which were the last five paragraphs of the quoted portion of paragraph 17 of the amended statement of claim (and the last five paragraphs of the July 12, 2005 article, which described Paisley J.’s costs ruling); and (ii) the Non-Cost Order Words, which were the remaining paragraphs of the quotation in paragraph 17.

[16]          The motion judge noted that, unlike s. 4(1) of the Libel and Slander Act, R.S.O. 1990, c. L.12, common law privilege does not require that the words be published contemporaneously with the judicial proceedings to which they relate. On the facts of this case, the motion judge concluded that the Cost Order Words contained “a very fair and accurate summary” of the costs endorsement of Paisley J. Moreover, he concluded that the appellant had not alleged malice and that no other objection raised by the appellant to the application of common law privilege applied.

[17]          Concerning the Non-Cost Order Words, the motion judge observed that the respondents relied on only one basis for their request that the action be dismissed, namely, that the words complained of were true. He concluded that it was implicit in that tactical position that the words complained of referred to the appellant and defamed him.

[18]          Although he acknowledged that the defamatory meaning of the Non-Cost Order Words was not pleaded as clearly as it could have been, the motion judge concluded that a fair reading of paragraphs 17 and 18 of the statement of claim indicates that the appellant is alleging that, when coupled with the Cost Order Words included in the same article, the Non-Cost Order Words linked the appellant “to Solhi and the 25 counts of fraud faced by Solhi”.

[19]          Given that the respondents had adduced no evidence to demonstrate that the appellant was in fact linked to the fraud charges faced by Solhi, and given his conclusion that it was implicit in the respondents’ position on the motion that the words complained of referred to the appellant and defamed him, the motion judge concluded that there was a genuine issue for trial concerning whether the Non-Cost Order Words were defamatory.

[20]          The motion judge therefore granted summary judgment dismissing the appellant’s claim for damages for defamation in relation to the Cost Order Words but dismissed the motion for summary judgment in relation to the Non-Cost Order Words.

Discussion

[21]          The appellant argues that the motion judge erred in artificially bifurcating his claim against the respondents and further erred in holding that the respondents are entitled to the benefit of common law privilege.

[22]          We accept the appellant’s submission that the motion judge erred in bifurcating his claim. However, we reject his submission that the motion judge erred in holding that the respondents are entitled to the benefit of common law privilege. Accordingly, in the unusual circumstances of this case, we conclude that the appellant’s appeal must be disposed of under s. 134(1) and (5) of the Courts of Justice Act, R.S.O. 1990, c. C.43, by ordering that the motion judge’s order be set aside and that the appellant’s action be dismissed in its entirety. In the result, it is unnecessary that we address the cross-appeal or the issue of our jurisdiction to address the cross-appeal.  

[23]          Although the appellant advanced a distinct claim for defamation against the respondents based on the Cost Order Words alone, he advanced an additional claim for defamation based on the linkage between the Cost Order Words and the Non-Cost Order Words.

[24]          Accordingly, in our view, the motion judge erred in bifurcating the appellant’s claim and holding that the Costs Order Words were entitled to the benefit of common law privilege while at the same time holding there was a genuine issue for trial concerning the Non-Costs Order Words.

[25]          That said, we reject the appellant’s submission that the motion judge erred in holding that the respondents were entitled to the benefit of common-law privilege. At para. 11 of his costs endorsement, Paisley J. said the following:

Mr. Chidley-Hill acted as counsel and vice president for the defendants, who acted in common, at the time that the abusive transactions...occurred, and as counsel at trial. He shared a common financial interest at that time with the defendants. He could not have been acting in an independent position when he stood to gain from his clients’ wrongdoing as it occurred, and while he was obliged to advise them as to their legal responsibilities. He had placed himself in conflict with his duty to the Court and to his clients, as he was unable to advise the clients as to their exposure to liability in this case, and the advantage of settling it, without admitting his own.

[26]          On a plain reading of para. 11, we agree with the motion judge’s conclusion that the Cost Order Words reflected a fair and accurate report of Paisley J.’s decision.

[27]          Further, the appellant acknowledged in his pleadings that the portion of the July 12, 2005 article that focused on Farley J.’s decision is entitled to the benefit of the statutory privilege contained in s. 4(1) of the Libel and Slander Act. He also acknowledged that the portion of the article that refers to the pending charges against Solhi is substantially correct. The only error in that report is the fact that one of the fraud charges was for fraud under $5,000.00 as opposed to fraud over $5,000.00. At para. 13.38, of Gatley on Libel and Slander, 11^th ed. (London: Sweet & Maxwell, 2008) the author writes that “[i]f the whole report is a substantially accurate account of what took place, the fact that there are a few slight inaccuracies or omissions is immaterial”.

[28]          The viability of the appellant’s claim therefore turns on whether coupling the report of the fraud charges against Solhi with a report of Paisley J.’s decision was capable of bearing a defamatory meaning in relation to the appellant – a question of law[1]. In our view, it was not. The fact that a lawyer is reported as having acted for a client who is alleged to have committed crimes is not reasonably capable of amounting to an allegation that the lawyer is somehow linked to the crimes.

[29]          Further, nothing in the report of Paisley J.’s decision was capable of linking the appellant to fraud charges pending against Solhi. Paisley J.’s decision suggested that the appellant was in a conflict of interest in acting as counsel in a particular action because he had a financial interest in the corporate clients and stood to gain from specific conduct of his client in wrongfully terminating and reselling a particular franchise based on the appellant’s financial interest in the client corporations. However, it did not link the appellant to the client’s fraudulent conduct and it was not capable of linking the appellant to any conduct of Solhi underlying the fraud charges pending against him.

[30]          Given that the respondents denied the claim in para. 18 of the amended statement of claim that the Article linked the appellant to the fraud charges against Solhi and denied that the words were capable of bearing a defamatory meaning, we conclude, respectfully, that the motion judge erred by treating the defamatory meaning as admitted for the purposes of the motion.

[31]          Accordingly, we reject the appellant’s argument that the motion judge erred in holding that the respondents are entitled to the benefit of common law privilege. Implicit in our conclusion, is a finding that there is no genuine issue for trial concerning whether the Non-Cost Order Words are capable of bearing a defamatory meaning when coupled with the Cost Order Words.

[32]          We see no error in the trial judge’s conclusion that there was no genuine issue for trial concerning whether the July 12, 2005 report was published with malice.

[33]          Nothing in these reasons should be taken as commenting on the motion judge’s reasons concerning justification.

Disposition

[34]          Based on the foregoing reasons, the appeal is allowed, the motion judge’s order is set aside and the appellant’s action is dismissed. Costs of the appeal are to the respondents on a partial indemnity scale fixed in the amount of $7,500 inclusive of applicable taxes and disbursements. No order as to costs of the cross-appeal. Costs of the motion and the action are to the respondents on a partial indemnity scale fixed in amount of $20,000 inclusive of applicable taxes and disbursements.

                        Signed:           “Janet Simmons J.A.”

                                                “R. G. Juriansz J.A.”

                                                “H. S. LaForme J.A.”

RELEASED:  “JS” December 8, 2010