McQuaig v. Harbour Financial Inc. et al., (2009) 481 A.R. 1 (QB)

• Judge: Romaine, J.
• Court: Court of Queen's Bench of Alberta (Canada)
• Case Date: November 19, 2009
• Citations: (2009), 481 A.R. 1 (QB);2009 ABQB 678

McQuaig v. Harbour Financial Inc. (2009), 481 A.R. 1 (QB)

MLB headnote and full text

Temp. Cite: [2009] A.R. TBEd. DE.065

David B. McQuaig (plaintiff) v. Harbour Financial Inc. and Brian Barbour (defendants)

(0501 03711; 2009 ABQB 678)

Indexed As: McQuaig v. Harbour Financial Inc. et al.

Alberta Court of Queen's Bench

Judicial District of Calgary

Romaine, J.

November 19, 2009.

Summary:

McQuaig, as the CEO of International Health Partners (IHP), retained Barbour and Harbour Financial Inc., an investor relations firm, to assist with a public offering of shares in the firm. The offering closed in March 2004. Harbour purchased a number of shares. Subsequently, McQuaig informed Barbour that IHP could no longer afford Harbour's services. IHP's 2004 year end financial statements revealed a significant net loss (13 cents per share). Barbour sent a series of memos and emails to IHP's board regarding McQuaig, alleging, inter alia, misrepresentation, dishonesty and incompetence. A number of messages were also posted on an IHP internet chat room regarding McQuaig. McQuaig sued Barbour and Harbour for defamation, requesting general and punitive damages as well as a permanent injunction restraining Barbour and Harbour from continuing to communicate false and defamatory statements regarding McQuaig to the investment community.

The Alberta Court of Queen's Bench allowed the action. The court awarded McQuaig general damages of $75,000, punitive damages of $25,000 and granted the requested injunction.

Damage Awards - Topic 632

Torts - Injury to the person - Libel and slander - [See Libel and Slander - Topic 4423 ].

Damage Awards - Topic 2015

Exemplary or punitive damages - Libel and slander - [See Libel and Slander - Topic 4429 ].

Injunctions - Topic 1448

Permanent injunctions - When granted - Defamation - [See Libel and Slander - Topic 5006 ].

Injunctions - Topic 6209

Particular matters - Torts - Defamation - [See Libel and Slander - Topic 5006 ].

Libel and Slander - Topic 65

General - Persons liable - Vicarious liability - [See Libel and Slander - Topic 644 ].

Libel and Slander - Topic 644

The statement - What constitutes defamatory statements - General principles - Disparagement of reputation - McQuaig, as the CEO of International Health Partners (IHP), retained Barbour and Harbour Financial Inc., an investor relations firm, to assist with a public offering of shares in the firm - The offering closed in March 2004 - Harbour purchased a number of shares - Subsequently, McQuaig informed Barbour that IHP could no longer afford Harbour's services - IHP's 2004 year end financial statements revealed a significant net loss (13 cents per share) - Barbour sent a series of memos and emails to IHP's board regarding McQuaig, alleging, inter alia, misrepresentation, dishonesty and incompetence - A number of messages were also posted on an IHP internet chat room regarding McQuaig - McQuaig sued Barbour and Harbour, alleging defamation - The Alberta Court of Queen's Bench found that the words and statements complained of met the test for defamation - The evidence of publication was clear - Barbour admitted the publication of the memos - Regarding the internet postings, the evidence showed that some of them might have been made by Barbour's brother while he was employed by Barbour - Barbour was vicariously liable for those - There was no question that the statements referred to McQuaig, even where his proper name was not used - The words and statements tended to lower McQuaig "in the estimation of right-thinking members of society" or exposed him to "hatred, contempt or ridicule" - See paragraphs 78 to 83.

Libel and Slander - Topic 652

The statement - What constitutes defamatory statements - General principles - Test for - [See Libel and Slander - Topic 644 ].

Libel and Slander - Topic 2864

Defences - Justification or truth - Evidence and proof - McQuaig, as the CEO of International Health Partners (IHP), retained Barbour and Harbour Financial Inc., an investor relations firm, to assist with a public offering of shares in the firm - The offering closed in March 2004 - Harbour purchased a number of shares - Subsequently, McQuaig informed Barbour that IHP could no longer afford Harbour's services - IHP's 2004 year end financial statements revealed a significant net loss (13 cents per share) - Barbour sent a series of memos and emails to IHP's board regarding McQuaig, alleging, inter alia, misrepresentation, dishonesty and incompetence - A number of messages were also posted on an IHP internet chat room regarding McQuaig - McQuaig sued Barbour and Harbour (the defendants) alleging defamation - The court found that the words and statements complained of were defamatory - At issue was the defendants' plea that the statements complained of as being defamatory in the memos to the board were true in substance and fact and were fair comment - The Alberta Court of Queen's Bench noted that this appeared to be a "rolled-up" plea, where the defences of justification and fair comment were wrapped into one - In a rolled-up plea, the defendants only had to prove that the facts were true and the comments were fair comment, made in good faith and without malice - The defendants had to state specifically what were fact and what were statements of opinion in relying on the rolled-up plea, but they had not done so - Nor had they proven the facts that they alleged nor stated a factual foundation for their allegations - While they submitted that the statements were not made maliciously, the issue of malice did not arise where the defendants had not satisfied the objective test of honest belief - The defendants had not established any valid defence to the defamation of McQuaig - See paragraphs 102 to 119.

Libel and Slander - Topic 2983

Defences - Qualified privilege - When available - In the context of a defamation action brought by the CEO of a firm against a shareholder, the Alberta Court of Queen's Bench discussed the availability of the defence of qualified privilege - The court stated that "[c]ommunications between shareholders and a board of directors or among shareholders for the purpose of raising issues of incompetence or potential dishonesty on behalf of company management are recognized as being made on an occasion of qualified privilege, although it has been held that communications on a website where there was a risk of significant exposure to persons who did not have an interest in the information exceeded the bounds of qualified privilege" - The effect of the defence was to rebut the inference that the words in question were spoken with malice - The bona fides of a defendant who published with qualified privilege was presumed - However, the privilege was not absolute and could be defeated in two situations: first, if the dominant motive for publishing a statement was actual or express malice and, second, when the limits of the duty to be discharged or the interest that gave rise to the privilege had been exceeded - Malice was not only spite or ill-will, but also included any direct motive or ulterior purpose that conflicted with the sense of duty or the mutual interest that the occasion created - Malice could be established where the defendant was shown to have spoken dishonestly or in knowing or reckless disregard for the truth - Regarding exceeding the limits of duty or interest, the information communicated had to be reasonably appropriate in the circumstances - See paragraphs 85 to 89.

Libel and Slander - Topic 2983

Defences - Qualified privilege - When available - McQuaig, as the CEO of International Health Partners (IHP), retained Barbour and Harbour Financial Inc., an investor relations firm, to assist with a public offering of shares in the firm - The offering closed in March 2004 - Harbour purchased a number of shares - Subsequently, McQuaig informed Barbour that IHP could no longer afford Harbour's services - IHP's 2004 year end financial statements revealed a significant net loss (13 cents per share) - Barbour sent a series of memos and emails to IHP's board regarding McQuaig, alleging, inter alia, misrepresentation, dishonesty and incompetence - A number of messages were also posted on an IHP internet chat room regarding McQuaig - McQuaig sued Barbour and Harbour alleging defamation - The court found that the words and statements complained of were defamatory - At issue was the defence of qualified privilege - The Alberta Court of Queen's Bench stated that Barbour's memos to the board, his sharing of the memos with brokers and even the chat room postings were prima facie protected by qualified privilege unless that privilege was lost through malice or because Barbour exceeded the limits of duty or interest - Malice was fact sensitive - While the memos addressed valid issues, the language was intemperate - The charges of deliberate false disclosures, "dishonest behaviour", "major misrepresentations" and "lies" were serious - The recklessness of Barbour's charges, his failure to adequately investigate them, even though he was aware of their seriousness, and the attacks on McQuaig personally established malice that defeated qualified privilege - After Barbour was warned that he faced a defamation action, that his threats to report matters to the Securities Commission were extortion and that the board had investigated the allegations and would make no charges, he co-operated with his brother in posting messages in the chat room that repeated the allegations and added new ones - These were accompanied by even more virulent and personal invective and by homophobic slurs against McQuaig - The fact that a similar viciousness of tone was not uncommon in this kind of "blogging" did not extend the scope of qualified privilege - See paragraphs 90 to 101.

Libel and Slander - Topic 2988

Defences - Qualified privilege - Loss of - Lack of honest belief or existence of malice - [See both Libel and Slander - Topic 2983 ].

Libel and Slander - Topic 2988.1

Defences - Qualified privilege - Loss of - Where limits of privilege exceeded - [See both Libel and Slander - Topic 2983 ].

Libel and Slander - Topic 3111

Defences - Fair comment - Rolled-up plea - [See Libel and Slander - Topic 2864 ].

Libel and Slander - Topic 3118

Defences - Fair comment - Evidence and proof - [See Libel and Slander - Topic 2864 ].

Libel and Slander - Topic 4061

Malice - As a bar to defence of fair comment or qualified privilege - General - [See both Libel and Slander - Topic 2983 ].

Libel and Slander - Topic 4423

Damages - General damages (incl. measure of) - Elements and considerations - McQuaig, as the CEO of International Health Partners (IHP), retained Barbour and Harbour Financial Inc., an investor relations firm, to assist with a public offering of shares in the firm - The offering closed in March 2004 - Harbour purchased a number of shares - Subsequently, McQuaig informed Barbour that IHP could no longer afford Harbour's services - IHP's 2004 year end financial statements revealed a significant net loss (13 cents per share) - Barbour sent a series of memos and emails to IHP's board regarding McQuaig, alleging, inter alia, misrepresentation, dishonesty and incompetence - A number of messages were also posted on an IHP internet chat room regarding McQuaig - McQuaig sued Barbour and Harbour (the defendants) alleging defamation - The court found that the words and statements complained of were defamatory and that the defendants had not established any valid defence - At issue was McQuaig's request for general damages - The Alberta Court of Queen's Bench awarded McQuaig general damages of $75,000 - McQuaig was the CEO of a public company - The allegations were particularly damaging to his reputation, focussing on him personally and alleging deliberate fraud on investors - They were made a number of times - Further, Barbour continued to assert his views through the trial and had never apologized nor retracted the statements - Barbour's conduct during litigation was evasive and self-serving - It was significant that Barbour was a professional communicator and was not unaware of the ability of allegations such as his to harm a business reputation - The defendants were jointly and severally liable - See paragraphs 120 to 132.

Libel and Slander - Topic 4429

Damages - General damages (incl. measure of) - Exemplary or punitive damages - When available - McQuaig, as the CEO of International Health Partners (IHP), retained Barbour and Harbour Financial Inc., an investor relations firm, to assist with a public offering of shares in the firm - The offering closed in March 2004 - Harbour purchased a number of shares - Subsequently, McQuaig informed Barbour that IHP could no longer afford Harbour's services - IHP's 2004 year end financial statements revealed a significant net loss (13 cents per share) - Barbour sent a series of memos and emails to IHP's board regarding McQuaig, alleging, inter alia, misrepresentation, dishonesty and incompetence - A number of messages were also posted on an IHP internet chat room regarding McQuaig - McQuaig sued Barbour and Harbour (the defendants) alleging defamation - The court found that the words and statements complained of were defamatory and that the defendants had not established any valid defence - At issue was McQuaig's request for punitive damages - The Alberta Court of Queen's Bench awarded McQuaig punitive damages of $25,000 - Punitive damages were appropriate due to Barbour's lack of credibility, continuing assertion of the defamatory statements and his deliberate attempts at character assassination including the disclosure of McQuaig's sexual orientation in a demeaning and insulting manner - This was not mere reflection of distaste for gratuitous insult, but a recognition that deliberate, outrageous behaviour had to be deterred by adequate damages awards - The defendants were jointly and severally liable - See paragraph 133.

Libel and Slander - Topic 5006

Injunctions - Restraining further defamation - McQuaig, as the CEO of International Health Partners (IHP), retained Barbour and Harbour Financial Inc., an investor relations firm, to assist with a public offering of shares in the firm - The offering closed in March 2004 - Harbour purchased a number of shares - Subsequently, McQuaig informed Barbour that IHP could no longer afford Harbour's services - IHP's 2004 year end financial statements revealed a significant net loss (13 cents per share) - Barbour sent a series of memos and emails to IHP's board regarding McQuaig, alleging, inter alia, misrepresentation, dishonesty and incompetence - A number of messages were also posted on an IHP internet chat room regarding McQuaig - McQuaig sued Barbour and Harbour (the defendants) alleging defamation - The court found that the words and statements complained of were defamatory and that the defendants had not established any valid defence - At issue was McQuaig's request for a permanent injunction restraining Barbour and Harbour from continuing to communicate false and defamatory statements regarding McQuaig to the investment community - The Alberta Court of Queen's Bench granted the requested injunction - Barbour had continued to assert his views through the trial, even when faced with evidence that contradicted them - Given his continued assertions of the defamatory statements, a permanent injunction was appropriate - See paragraph 135.

Cases Noticed:

Fraser v. Sykes (1971), 19 D.L.R.(3d) 75 (Alta. C.A.), refd to. [para. 82].

Botiuk v. Bardyn et al., [1995] 3 S.C.R. 3; 186 N.R. 1; 85 O.A.C. 81, refd to. [para. 83].

Botiuk v. Toronto Free Press Publications Ltd. - see Botiuk v. Bardyn et al.

Simpson v. Mair et al. (2008), 376 N.R. 80; 256 B.C.A.C. 1; 431 W.A.C. 1 (S.C.C.), refd to. [para. 84].

WIC Radio Ltd. v. Simpson - see Simpson v. Mair et al.

Angle et al. v. LaPierre et al. (2006), 392 A.R. 1 (Q.B.), refd to. [para. 86].

Hill v. Church of Scientology of Toronto and Manning, [1995] 2 S.C.R. 1130; 184 N.R. 1; 84 O.A.C. 1, refd to. [para. 87].

Christie v. Geiger and Edmonton Sun (1986), 74 A.R. 1 (C.A.), refd to. [para. 91].

Varga v. Van Panhuis (2000), 269 A.R. 211 (Q.B.), refd to. [para. 92].

Smith v. ADVFN plc et al., [2008] All E.R.(D.) 335 (C.A.), refd to. [para. 101].

Sykes v. Southam Inc., [1991] 3 W.W.R. 27; 115 A.R. 100 (Q.B.), refd to. [para. 103].

Chapman v. Anderson et al. (2006), 407 A.R. 256 (Q.B.), refd to. [para. 114].

Simpson v. Mair et al. (2008), 376 N.R. 80; 256 B.C.A.C. 1; 431 W.A.C. 1 (S.C.C.), refd to. [para. 115].

Reynolds v. Times Newspapers Ltd. et al., [1999] 4 All E.R. 609; 250 N.R. 1 (H.L.), refd to. [para. 118].

Authors and Works Noticed:

Gatley, Clement, Libel and Slander (8th Ed. 1981), p. 185 [para. 85].

Counsel:

Doug A. McGillivray, Q.C., and David A. de Groot, for the plaintiff;

John D. Blair and Daniel Gilborn, for the defendants.

This action was heard by Romaine, J., of the Alberta Court of Queen's Bench, Judicial District of Calgary, who delivered the following reasons for judgment on November 19, 2009.