Merit Consultants International Ltd. v. Chandler et al., 2014 BCCA 121

• Judge: Newbury, Bennett and Willcock, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: March 04, 2014
• Jurisdiction: British Columbia
• Citations: 2014 BCCA 121;(2014), 353 B.C.A.C. 199 (CA)

Merit Consultants Intl. v. Chandler (2014), 353 B.C.A.C. 199 (CA);

    603 W.A.C. 199

MLB headnote and full text

Temp. Cite: [2014] B.C.A.C. TBEd. AP.004

Merit Consultants International Ltd. (appellant/plaintiff) v. Terence Chandler, Kenneth Lowe, Wayne Babcock, Peter James Dey and Robert Carmichael (respondents/defendants)

(CA040541; 2014 BCCA 121)

Indexed As: Merit Consultants International Ltd. v. Chandler et al.

British Columbia Court of Appeal

Newbury, Bennett and Willcock, JJ.A.

April 2, 2014.

Summary:

Redfern Resources hired Merit Consultants International Ltd. as construction manager for a mining project. Redfern terminated the agreement because of concern over the quality of Merit's work. Merit sued Redfern and its parent company, Redcorp Ventures Ltd., for breach of contract. Redcorp, in accordance with the disclosure requirements of the Securities Act, issued a press release notifying current and prospective shareholders of the lawsuit and Redcorp's intention to counterclaim for negligence and breach of contract. Merit's action was stayed when Redfern and Redcorp sought protection under the Companies' Creditors Arrangement Act. Merit then commenced an action against the directors of Redcorp (defendants) in their personal capacity. Merit claimed that the reference in the news release to a counterclaim for negligence damaged its reputation. The defendant directors sought dismissal of the action on a summary trial basis.

The British Columbia Supreme Court, in a decision reported [2012] B.C.T.C. Uned. 1868, granted the defendants' motion and dismissed the action. In a separate decision reported [2013] B.C.T.C. Uned. 582, special costs were awarded against Merit. Merit appealed both from the dismissal of the action and the award of special costs.

The British Columbia Court of Appeal dismissed the appeal on the merits. The court held that the appeal should be dismissed because the defendant directors, as opposed to the companies, did not in law "publish" the impugned news release for purposes of liability in defamation. Further qualified privilege applied. The court allowed the appeal from the costs award. The court stated that while Merit's defamation action was weak, it was not wholly without merit, such that no reasonable solicitor would think it appropriate to proceed.

Company Law - Topic 4183

Directors - Liability of directors - For torts (incl. libel) - See paragraphs 14 to 25.

Libel and Slander - Topic 67

General - Persons liable - Corporations (incl. directors) - See paragraphs 14 to 25.

Libel and Slander - Topic 1941

Publication - What constitutes - General - See paragraphs 14 to 25.

Libel and Slander - Topic 2983

Defences - Qualified privilege - When available - See paragraphs 26 to 36.

Libel and Slander - Topic 2992

Defences - Qualified privilege - Judicial proceedings (incl. preparatory steps) - See paragraphs 26 to 36.

Practice - Topic 7457

Costs - Solicitor and client costs - Entitlement to - Where claim or defence irrelevant, scandalous or without merit - See paragraphs 37 to 46.

Cases Noticed:

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. 7].

Hamouth v. Edwards & Angell (2005), 210 B.C.A.C. 225; 348 W.A.C. 225; 2005 BCCA 172, refd to. [para. 8].

Hamouth v. Smart Video Technologies Inc. - see Hamouth v. Edwards & Angell.

Elliott v. Insurance Crime Prevention Bureau et al. (2005), 236 N.S.R.(2d) 104; 749 A.P.R. 104; 2005 NSCA 115, refd to. [para. 9].

Moseley-Williams v. Hansler Industries Ltd. (2004), 38 C.C.E.L.(3d) 111 (Ont. Sup. Ct.), refd to. [para. 9].

Edmonton Journal v. Alberta (Attorney General), [1989] 2 S.C.R. 1326; 102 N.R. 321; 103 A.R. 321, refd to. [para. 9].

Houston Chronicle Publisher Co. v. Stewart (1983), 668 S.W.2d 727 (Tex. App.), refd to. [para. 14].

XY Inc. v. International Newtech Development Inc. et al. (2013), 343 B.C.A.C. 30; 586 W.A.C. 30; 2013 BCCA 352, refd to. [para. 15].

XY Inc. v. Zhu - see XY Inc. v. International Newtech Development Inc. et al.

Said v. Butt, [1920] 3 K.B. 497, refd to. [para. 15].

Montreal Trust Co. of Canada et al. v. ScotiaMcLeod Inc. et al. (1995), 87 O.A.C. 129; 129 D.L.R.(4th) 711 (C.A.), refd to. [para. 16].

ScotiaMcLeod Inc. v. Peoples Jewellers Ltd. - see Montreal Trust Co. of Canada et al. v. ScotiaMcLeod Inc. et al.

ADGA Systems International Ltd. v. Valcom Ltd. et al. (1999), 117 O.A.C. 39; 168 D.L.R.(4th) 351 (C.A.), leave to appeal refused (2000), 254 N.R. 400; 134 O.A.C. 400 (S.C.C.), refd to. [para. 16].

Salomon v. Salomon & Co., [1897] A.C. 22 (H.L.), refd to. [para. 19].

Meditrust Healthcare Inc. v. Shoppers Drug Mart et al. (1999), 124 O.A.C. 137 (C.A.), refd to. [para. 20].

NBD Bank Canada v. Dofasco Inc. et al. (1999), 127 O.A.C. 338; 46 O.R.(3d) 514 (C.A.), refd to. [para. 20].

Immocreek Corp. v. Pretiosa Enterprises Ltd. et al. (2000), 131 O.A.C. 358; 186 D.L.R.(4th) 36 (C.A.), refd to. [para. 20].

Lana International Ltd. et al. v. Menasco Aerospace Ltd. et al. (2000), 136 O.A.C. 71; 190 D.L.R.(4th) 340 (C.A.), refd to. [para. 20].

Hildebrand v. Fox et al. (2008), 262 B.C.A.C. 11; 441 W.A.C. 11; 2008 BCCA 434, refd to. [para. 21].

Strata Plan VIS3578, Owners v. Canan Investment Group Ltd. et al. (2010), 295 B.C.A.C. 132; 501 W.A.C. 132; 2010 BCCA 329, refd to. [para. 21].

Strata Plan VIS3578, Owners v. Neilson (John A.) Architects Inc. - see Strata Plan VIS3578, Owners v. Canan Investment Group Ltd. et al.

Kepic v. Tecumseh Road Builders et al. (1987), 23 O.A.C. 72; 18 C.C.E.L. 218 (C.A.), refd to. [para. 23].

Wang v. British Columbia Medical Association et al., [2013] B.C.T.C. Uned. 394; 2013 BCSC 394, refd to. [para. 24].

Botiuk v. Bardyn et al., [1995] 3 S.C.R. 3; 186 N.R. 1; 85 O.A.C. 81, refd to. [para. 30].

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

Bennette v. Cohen, [2009] NSWCA 60, refd to. [para. 30].

Adam v. Ward, [1917] A.C. 309 (H.L.), refd to. [para. 30].

Stuart v. Bell, [1891] 2 Q.B. 341 (C.A.), refd to. [para. 30].

Toogood v. Spyring (1834), 1 Cr. M. & R. 181, refd to. [para. 30].

Martin v. Lavigne et al. (2011), 302 B.C.A.C. 121; 511 W.A.C. 121; 2011 BCCA 104, refd to. [para. 31].

Jones v. Bennett, [1969] S.C.R. 277, refd to. [para. 31].

Smith v. Cross (2009), 278 B.C.A.C. 262; 471 W.A.C. 262; 2009 BCCA 529, refd to. [para. 33].

Concord Industrial Services Ltd. v. 371773 B.C. Ltd., [2002] B.C.T.C. 900; 2002 BCSC 900, refd to. [para. 38].

Garcia v. Crestbrook Forest Industries Ltd. (1994), 45 B.C.A.C. 222; 72 W.A.C. 222; 119 D.L.R.(4th) 740 (C.A.), refd to. [para. 39].

Webber et al. v. Singh et al. (2006), 232 B.C.A.C. 154; 385 W.A.C. 154; 2006 BCCA 501, refd to. [para. 41].

Webber v. Dulai Roofing Ltd. - see Webber et al. v. Singh et al.

Young v. Young et al. (1990), 50 B.C.L.R.(2d) 1 (C.A.), revd. in part [1993] 4 S.C.R. 3; 160 N.R. 1; 34 B.C.A.C. 161; 56 W.A.C. 161, refd to. [para. 44].

Authors and Works Noticed:

Brown, Raymond E., The Law of Defamation in Canada (2nd Ed. 1994) (Looseleaf), §§ 12.4(1) [para. 8]; 12.4(2) [para. 10]; 13.1, 13.2(1), 13.7 [para. 29]; 13.7(4) [para. 30].

Burns, Peter, and Blom, Joost, Economic Interests in Canadian Tort Law (2009), p. 76 [para. 23].

Debenham, David, The Scylla of Motions Court and the Charybdis of the Court of Appeal: The Scope of Directors' and Officers' Common Law Liabilities in the Post-ADGA Era (2001), 25 Adv. Q. 21, generally [para. 15].

Nicholls, Christopher C., Liability of Corporate Officers and Directors to Third Parties (2001), 35 Cdn. Bus. L.J. 1, generally [para. 15]; pp. 19, 22 [para. 20].

Sarra, J., The Corporate Veil Lifted: Director and Officer Liability to Third Parties (2001), 35 Cdn. Bus. L.J. 55, generally [para. 15].

Counsel:

K. McLean, for the appellant;

S.B. Margolis, Q.C., and T.J. Moran, for the respondents.

This appeal was heard in Vancouver, B.C., on March 4, 2014, before Newbury, Bennett and Willcock, JJ.A., of the British Columbia Court of Appeal. The following decision was delivered for the court by Newbury, J.A., on April 2, 2014.