



COURT OF APPEAL FOR ONTARIO

CITATION: 1654776 Ontario
    Limited v. Stewart, 2013 ONCA 184

DATE: 20130327

DOCKET: C55493

Laskin, Juriansz and Tulloch JJ.A.

BETWEEN

1654776 Ontario Limited

Applicant (Appellant)

and

Sinclair Stewart and The Globe and Mail Inc.

Respondents (Respondents)

Paul Bates, A. Dimitri Lascaris, Douglas M. Worndl and
    Robert L. Gain for the appellant

Peter M. Jacobsen, Paul LeVay, Tae Mee Park, and Justin
    Safayeni for the respondents

Heard: September 17, 2012

On appeal from the judgment of Justice Edward P. Belobaba
    of the Superior Court of Justice, dated April 20, 2012, with reasons reported
    at 2012 ONSC 1991.

Juriansz
    J.A.:

A.

Introduction

[1]

This appeal is from the judgment of Justice Edward P. Belobaba
    dismissing the appellants application for an order that the respondents
    disclose the identities of confidential sources for a story written by the
    respondent Sinclair Stewart and published by the respondent the Globe and Mail
    Inc. The appellant, whose sole officer, director and shareholder is Jeffrey G.
    MacIntosh, holder of the Toronto Stock Exchange Chair in Capital Markets Law at
    the University of Toronto Law School, seeks their identities to proceed with a
    proposed class action relying on the provisions of the
Securities Act
,

R.S.O. 1990, c. S.5, that create private rights of action.

[2]

The law regarding the type of relief the appellant sought, a 
Norwich
order, originated in
Norwich Pharmacal
Co. v. Comrs. of Customs and Excise
, [1974] A.C. 133, and was most
    recently considered by this court in
GEA Group AG v. Ventra Group Co.
,
    2009 ONCA 619, 96 O.R. (3d) 481. Cronk J.A. explained the origin and nature of
    the remedy at para. 41:

The remedy of pre-action discovery derives from the ancient
    bill of discovery in equity. Contemporary consideration of this type of
    equitable relief began with the 1974 decision of the House of Lords in
Norwich
    Pharmacal
, a case of suspected patent infringement.
Norwich Pharmacal
holds that, in certain circumstances, an action for discovery may be allowed
    against an "involved" third party who has information that the
    claimant alleges would allow it to identify a wrongdoer, so as to enable the
    claimant to bring an action against the wrongdoer where the claimant would
    otherwise not be able to do so.

[3]

The appellants
Norwich
application has to be considered in the
    context of the respondents claim of journalist-source privilege. The
    respondents claim of privilege must be determined by the four-part Wigmore
    test for establishing journalist-source privilege as set out in the Supreme
    Courts decision in
R. v. National Post
, 2010 SCC 16, [2010] 1 S.C.R.
    477.

[4]

The application judge regarded the appellants proposed claim as serving
    private interests and concluded it had little merit and would likely fail.
    Consequently, he found the public interest in preserving journalist-source
    privilege outweighed any interest in the appellants claim.

[5]

I would dismiss the appeal. The appellant has put forward a claim that,
    except for the respondents claim of privilege, would entitle it to
    disclosure.  The apparent strength of the case, however, is weak. The public
    interest in free expression must always be weighed heavily in the balance. Upholding
    the privilege would not leave the appellant without a remedy. It can proceed
    against the companies involved. The public interest in promoting compliance
    with the disclosure regime regulated by the
Securities Act
can be
    adequately served without granting disclosure.

B.

Facts

[6]

The appellant brought its application for a
Norwich
order on
    March 31, 2011. The application was not heard until March 21-23, 2012.
    Meanwhile, the appellant filed a statement of claim against BCE Inc., 6796508
    Canada Inc. (Canada Inc.) and John or Jane Doe on June 27, 2011, and amended
    it on March 20, 2012.

[7]

In the action, the appellant seeks $30 million in general damages and $5
    million in punitive damages arising from fluctuations in the price of BCE
    shares over a four-day period during the attempted leveraged buy-out of BCE in 2007-2008.
    BCE announced the leveraged buyout in a press release dated June 30, 2007. The
    press release stated that BCE had entered into an agreement with Canada Inc.
    for the acquisition of all of BCEs common shares by means of an all-cash bid
    of $42.75 per share.

[8]

In compliance with the requirements of the Ontario
Securities Act
BCE filed a material change report dated July 5, 2007 concerning the
    transaction and describing the future events that could affect its completion,
    including financing covenants, regulatory approvals, and conditions precedent.

[9]

Ultimately on June 20, 2008, after proceedings that reached the Supreme
    Court of Canada, the courts approved the transaction. BCE and Canada Inc.
    issued a joint public statement confirming their continued commitment to the
    transaction.

[10]

On
    June 30, 2008 the Globe and Mail published a story in its business section that
    the buyout would likely be delayed, if it proceeded at all. The Globe and
    Mails story reported information supplied by the confidential sources. In the
    lead paragraph, Stewart wrote:

[The] problem-plagued $35 billion takeover of BCE Inc. will
    likely be delayed until the end of the year owing to the increasingly fractious
    negotiations between the company's private equity buyers and a syndicate of
    lenders who are pushing to lower the value of the buyout, according to people
    involved in the negotiations.

[11]

Stewart
    then went on to provide a more detailed discussion, which included references
    to confidential sources who were at the bargaining table and participating
    in negotiations:

Sources close to the talks say the banks financing the deal are
    balking at the proposed purchase price of $42.75 a share, and are instead
    insisting that the company should be valued on the same basis as rival Telus
    Corp., which would imply a steeply discounted price of between $35 and $38 a
    share.

Although the two sides are still talking, several sources
    described the tenor of the discussions as grinding and suggested that the
    parties remained far apart on a number of key issues.

'Everyone has underestimated when this deal gets done,' said
    one executive at the bargaining table. 'It's Christmas'.

The source added he did not think the buyers and the banks
    would reach an agreement over the financing terms this summer, if at all.

Sources say given the current uncertainty around the
    acquisition, there is almost no chance BCE will pay out [its $294 million
    quarterly dividend].

Two high-level sources, one at BCE and another that is
    participating in negotiations, insisted that the company's embattled board had
    little appetite for lowering the price of the offer.

'They're at $42.75 and damn the torpedoes,' said one of the
    sources.
[1]


[12]

Stewart,
    on cross-examination, indicated that the high-level source at BCE was privy
    to the BCE board negotiating position and that the source consented to being
    identified as being with BCE.

[13]

The
    appellant claims that on the trading day following the publication of the article,
    the price of BCE shares fell 3.3% and the market price of BCE call options fell
    precipitously. On July 2, 2008 the appellant disposed of BCE shares and BCE
    call options at a loss of $35,900.

[14]

On
    July 4, four days after the article was published, BCE issued a press release
    announcing that a "final agreement" had been achieved and the
    transaction would proceed at the purchase price of $42.75 per share. After the
    July 4 announcement, the appellant claims the shares jumped from $35.15 to
    $39.50, about 12%; and the call options from $0.17 the day before to $1.90, an
    increase of over 1000%.

[15]

Ultimately
    the transaction did not proceed.

[16]

The
    appellant believed that the confidential sources had breached the Ontario
Securities
    Act
. MacIntosh wrote to and spoke with enforcement officers of the Ontario
    Securities Commission attempting to prompt it to commence a formal
    investigation. He wrote two op-ed pieces in the
National Post
opining
    that the OSC should investigate the possible manipulation of the options market
    during the failed BCE bid.

[17]

With
    a view to commencing an action, the appellant requested that Stewart and the
    Globe and Mail provide him with the identities of the unnamed sources quoted in
    the article, but they refused to do so. The appellant then brought its
Norwich
application and then issued its statement of claim.

[18]

The
    defendants named in the claim are BCE, Canada Inc., and John or Jane Doe. Among
    other relief, the action claims a declaration that the defendants breached s.
    76, s. 126.1, and/or s. 126.2 of the Ontario
Securities Act
. Section
    76(2) prohibits a person in a special relationship with a reporting issuer
    from informing another person of a material fact or material change with
    respect to the reporting issuer before the material fact or material change has
    been generally disclosed. Section 126.1 prohibits a person from perpetrating a
    fraud on any person or company. Section 126.2 prohibits a person from making a
    misleading or untrue statement that would reasonably be expected to have a significant
    effect on the market price or value of the security.

[19]

The
    statement of claim alleges that the statements made by Doe to Sinclair and
    attributed to Doe in the story were false and/or materially misleading. The
    claim alleges that Doe made the statements for tactical reasons in the
    negotiations and the statements were not intended to be a true and accurate
    description of the status of the transaction.

[20]

The
    claim goes on to allege that the appellant, relying on the false and/or
    materially misleading statements, disposed of its shares and call options at
    prices artificially depressed by the story. The claim asserts that the prices
    rebounded sharply four days later, when BCE announced by press release that a
    final agreement had been reached.

[21]

The
    statement of claim seeks to assert the rights of action provided for in s.
    138.3(2), (3) and (4) of Part XXIII.1 of the Ontario
Securities Act
relating
    to civil liability for secondary market disclosure. Section 138.3(2) creates
    a right of action for damages when a person with actual, implied or apparent authority
    to speak on behalf of a responsible issuer has made a public oral statement
    relating to the business or affairs of the responsible issuer that contains a
    misrepresentation. Section 138.3(3) creates a right of action for damages when an
    influential person has made a public oral statement relating to the business
    or affairs of a responsible issuer that contains a misrepresentation. Section
    138.3(4) creates a right of action for damages against a responsible issuer for
    the failure to make timely disclosure of material changes required to be
    disclosed under the Act.

[22]

As
    provided by s. 138.8(1), actions under s. 138.3 cannot be commenced without
    leave of the court granted upon motion with notice to each defendant. Since
    the appellant is unable to give notice to John or Jane Doe, the statement of
    claim filed indicates the appellant intends to bring a motion for leave under
    s. 138.8(1).

[23]

The
    appellant in his action also claims damages for negligent misrepresentation. It
    claims that the applicable standard of care required the defendants to not make
    misleading or untrue statements that violated s. 126.2 of the Ontario
Securities
    Act
, and to not engage in illegal tipping contrary to s. 76(2).

[24]

The
    action also claims oppression and indicates an intention to seek certification
    as a class action.

C.

The
    decision of the application judge

[25]

The
    application judge declined to grant the
Norwich
order. He noted that
    the
Norwich
and Wigmore analyses intersect when an applicant is
    seeking disclosure of confidential journalist sources. In order to obtain a
Norwich
order, the application judge stated that the applicant must show that:

(i)

it has a valid,
bona fide
, or reasonable claim; or in cases such
    as this one where freedom of expression
[2]
interests are engaged, that it has a
prima facie
case;

(ii)

the respondents are somehow involved in the acts complained of;

(iii)

the respondents are the only practical source of the information;

(iv)

the respondents can be indemnified for any costs of disclosure; and

(v)

the interests of justice favour the obtaining of the disclosure.

[26]

I
    explain later that the first requirement is not correctly stated.

[27]

The
    Wigmore framework for establishing journalist-source privilege requires that
    the party asserting the privilege show that:

(i)

the communication originated in a confidence that the sources identity
    will not be disclosed;

(ii)

anonymity is essential to the relationship in which the communication
    arises;

(iii)

the relationship is one which should be sedulously fostered in the public
    interest;

(iv)

the public interest served by protecting the identity of the informant
    outweighs the public interest in getting at the truth.

[28]

Having
    set out the legal framework, the application judge proceeded to apply the
Norwich
criteria. The respondents submitted that the appellant had not established a
prima
    facie
claim under the first stage of the analysis because none of the
    statements was actionable and, in any event, the actions were time-barred under
    s. 138.14 of the
Securities Act
and s. 4 of the
Limitations Act
,
    S.O. 2002, c. 24, Schedule B. The application judge preferred to address the
    strength of the applicants case when balancing the interests in the final
    stage of the
Norwich
analysis. He proceeded to assume, without deciding
    that a
prima facie
claim had been established under the first stage of
    the
Norwich
test.

[29]

At
    the final stage of the
Norwich
analysis, the application judge applied
    the Wigmore test for journalist-source privilege to determine whether the
    interests of justice favour obtaining the disclosure. He stated, at para. 40:

When the Norwich and Wigmore tests intersect, such as here, the
    Wigmore test becomes almost the entire interests of justice analysis that is
    conducted in the fifth step of the Norwich test. In other words, if the
    four-part Wigmore test is satisfied by the media respondents, it probably will
    not be in the interests of justice to order disclosure. If the Wigmore test is
    not satisfied at any of the four steps, it probably will be in the interests of
    justice to order disclosure. [Citations omitted].

[30]

The
    appellant argued that step one of the Wigmore test was not satisfied because
    Stewart failed to ask his sources why they were willing to disclose the
    information and whether they were aware that disclosure might violate
    provincial securities law. The application judge held that journalists are not
    required to ask these types of questions in order to establish
    journalist-source privilege. He relied on the Supreme Court of Canadas
    decision in
Globe and Mail v. Canada (Attorney General)
(
Groupe
    Polygone
)
,
2010 SCC 41, (2010) 2 S.C.R. 592, which stated at para.
    84 that [a] journalist is under no obligation to act as legal advisor to his
    or her source of information.

[31]

The
    second Wigmore criterion was satisfied because the relationship originated in a
    confidence that the sources identities would not be disclosed.

[32]

The
    appellant took issue with the third criterion of the Wigmore test. It argued
    that the relationship between a deal-insider and a business journalist should
    not be sedulously fostered where the insider discloses information in a
    manner that breaches securities law.

[33]

The
    application judge rejected this argument at para. 36 saying that the concern is
    the legitimacy and status of the journalist: is he or she an accredited
    professional or a less than credible, one-off blogger? He continued, Assuming
    the journalist can show professional standing with a legitimate news
    organization, the third step is readily satisfied. As authority for this
    conclusion, he cited Binnie J.s remark at para. 57 of
National Post
,
    "[I]n general, the relationship between professional journalists and their
    secret sources is a relationship that ought to be sedulously fostered."

[34]

Another
    reason for rejecting the appellants approach to step three, the application
    judge said, was because any evaluation of the content of the communication is
    properly addressed at step four of the analysis, not at step three.

[35]

The
    application judge found that step three was satisfied.

[36]

Moving
    to the fourth and final criterion the application judge observed at para. 37
    that, The weighing up will include the nature and seriousness of the alleged
    wrong-doing and the probative value of the evidence sought to be obtained,
    measured against the public interest in respecting the journalist's promise of
    confidentiality.

[37]

In
    assessing the probative value of the evidence the application judge revisited
    the merits of the appellants cause of action and engaged in a thorough
    analysis of the alleged
Securities Act
violations.

[38]

In
    support of its position that the sources statements may have been misleading
    or untrue, the appellant pointed to the improbability that negotiations of this
    magnitude could have been collapsing on Monday and then resulted in an
    agreement on Friday. The application judge found this submission to be
    contrary to common sense and common knowledge, as [n]egotiations that are on
    the verge of collapsing on day one can and do result in an agreement on day
    four, at para. 46. He also found that the contents of Stewarts article were
    substantially similar to the information contained in articles published by
    other newspapers at the time. The application judge stated that it strains
    credulity to suggest that all of these articles were misleading or untrue, at
    para. 48.

[39]

If
    the information provided by the sources was true, the application judge also
    found that it was unlikely that the respondents sources contravened the
    insider tipping provisions of the Act. In his view, the June 30 article did not
    contain any material information. The application judge found that the
    information in the article was neither new nor different from what had already
    been published over the previous ten days and therefore would not reasonably
    be expected to have a significant effect on the market price of BCE
    securities, at para. 56.

[40]

The
    application judge concluded that the statements of the sources in the June 30
    article were probably not in breach of the
Securities Act
, though
    they could possibly be in breach of the Act. He stated, at para. 42:

In my view, none of what was said by the confidential sources
    was clearly or even likely in breach of provincial securities law. I find that
    the most that can be said about the sources statements as published in the article
    is that they were
possibly
in breach of the
Securities Act
.
    In other words, the level of criminality or quasi-criminality at its very
    highest is very low  at most, there was
possible
wrong-doing.
    [Emphasis in original.]

[41]

The
    public interest in free expression and the special position of the media
    weighed in favour of protecting the sources. This was particularly important
    given that the BCE leveraged buy-out was a matter of national and international
    importance. Conversely, the public interest favouring disclosure was minimal
    given that there was only a possible breach of securities law. Accordingly,
    the final Wigmore factor favoured protecting the identity of the respondents
    sources.

[42]

The
    application judge declined to grant a
Norwich
order.

[43]

As
    a final comment, at para. 74, the application judge added: No one denies that
    great damage can be done to the integrity of capital markets and to
    shareholders and investors by secret and selective disclosure of confidential
    corporate information by deal-insiders in violation of provincial securities
    law. He observed that [t]here may well be cases where the information
    provided by the confidential financial sources is in contravention of
    securities law and a claimed journalist-source privilege will be trumped by a
    greater public interest in the criminal investigation and prosecution of
    wrong-doers. This was not one of those cases because, in his view, the
    appellants action lacked merit.

D.

Analysis

[44]

I
    agree with much of the application judges analsysis, but take a different view
    of some issues.

[45]

This
    case, as the application judge noted, requires the application of the
Norwich
test for determining when an applicant is entitled to learn the identity of a
    wrongdoer and the Wigmore test for determining whether a journalist can assert
    privilege to protect the identity of a confidential source. Only if the
    applicant is otherwise entitled to a
Norwich
order, is it necessary to
    consider the journalists claim of privilege.

[46]

I
    proceed to first consider whether the appellant is able to satisfy the
Norwich
test.

(1)

The
Norwich
test

(a)

The first
Norwich
factor

[47]

The
    application judge did not consider whether the appellant satisfied the first step
    of the Norwich test. He simply assumed it had and proceeded on with the
    analysis. Although he assumed it was satisfied, his statement of the standard
    to be met is not correct. He said that at the first step the appellant was
    required to show a stronger case than an applicant in an ordinary
Norwich
application because freedom of expression was involved. In imposing an elevated
    standard he followed
Warman v. Fournier
, 2010 ONSC 2126, 100 O.R. (3d)
    648, a decision of the Divisional Court, and
Morris v. Johnson
, 2011
    ONSC 3996, 107 O.R. (3d) 311, a decision of the Superior Court that followed
Warman
.
    In my view, these cases do not state the law correctly. I review the relevant
    jurisprudence to indicate the proper standard.

[48]

In
Warman
, the applicant sought disclosure of the identities and email
    addresses of persons who, using pseudonyms, posted allegedly defamatory
    material on an Internet message board. At para. 42 the Divisional Court
    reasoned that since the case engage[d] a freedom of expression interest, as
    well as a privacy interest, a more robust standard is required to address the
    chilling effect on freedom of expression that will result from disclosure. The
    court went on to explain that [t]he requirement to demonstrate a
prima
    facie
case of defamation furthers the objective of establishing an
    appropriate balance between the public interest in favour of disclosure and
    legitimate interests of privacy and freedom of expression.

[49]

In
    my view this approach is inconsistent with the proper application of both the
Norwich
and Wigmore tests. Generally, values like freedom of expression are to be
    considered at step five of the
Norwich
test. In this case the Wigmore
    test is the proper framework for considering the chilling effect on freedom of
    expression and attempting to strike the appropriate balance of the competing
    interests involved. Adopting a more robust standard at step one of the
Norwich
test overlooks the function of step five, which is to consider whether the
    interests of justice favour disclosure. At step five of the
Norwich
analysis the Wigmore test can be applied to determine whether the interests of
    justice favour disclosure.  Automatically applying a more robust standard at
    step one of all
Norwich
applications involving freedom of expression
    loses sight of the case-by-case approach required by
National Post
and
Groupe Polygone
, and

of the fact that the onus is on the
    media to satisfy the Wigmore test.

[50]

The
    most recent Court of Appeal decision on
Norwich
orders,
GEA
,

adopted the factors set out in
Glaxo Wellcome PLC v. M.N.R
.,
    [1998] 4 F.C. 439 (C.A.) and
Alberta (Treasury Branches) v. Leahy,
2000
    ABQB 575, 270 A.R. 1. In
Glaxo
, Stone J.A., writing for the Federal
    Court of Appeal said that the applicants must have a
bona fide
claim
    against the alleged wrongdoers. In
Leahy
, Mason J. of the Alberta
    Court of Queens Bench stated the first requirement is that the applicant provide
    evidence sufficient to raise a valid,
bona fide
or reasonable claim
    at para. 106. Cronk J.A. in
GEA
did not discuss these cases different
    articulations of the test, as the strength of the claim required by the first
Norwich
factor was not an issue in
GEA
.

[51]

In
Glaxo
, Stone J.A. said at para. 24:

It seems to me that the requirement that the appellant have a
bona
    fide
claim against the alleged wrongdoers is intended to ensure that
    actions for a bill of discovery are not brought frivolously or without any
    justification.

He noted, at para. 30, that some Canadian courts
    require that the applicant show that he or she is likely to succeed at trial.
    Observing that the defendants might raise a number of defenses to the action,
    Stone J.A. said that seemed to him to go too far.

[52]

Mason
    J. in
Leahy
stated that the purpose of requiring a valid,
bona
    fide
or reasonable claim was to exclude frivolous claims. At para. 122 he
    agreed with Stone J.A.'s comments at para. 24 of
Glaxo
that
    consideration of the evidence presented by the applicant will assist in
    ensuring that these applications are not brought frivolously and without
    justification. He went on to find that the applications before him were
    neither frivolous nor unjustified at para. 123.

[53]

In
    an earlier decision of this court,
Straka v. Humber River Regional Hospital
(2000), 51 O.R. (3d) 1, Morden J.A. accepted Stone J.A.s explanation of the
    first
Norwich
factor in
Glaxo
. Interestingly,
Straka
was a
Norwich
case that involved the application of the Wigmore test,
    much like this case does.

[54]

The
    applicant in
Straka
, a doctor, sought the identities of persons who
    had written reference letters that led to the hospital refusing him staff
    privileges. After the hospital denied his request to see the letters, the
    doctor commenced an application for an order for production of the letters so
    he could pursue a possible action in defamation or for interference with
    economic relations, pursue staff privileges at the respondent hospital,
and
    evaluate whether or not to commence litigation to protect his reputation
.
    The hospital respondent claimed privilege as the references had been obtained
    on promises of confidentiality. The production order was refused and the doctor
    appealed.

[55]

In
    his analysis, Morden J.A. considered whether the applicants potential claim
    against the persons who had given references was 
bona fide
.
    Ultimately the doctors appeal was dismissed. However, what is important for
    our purposes is that it was not dismissed because he had failed to establish his
    proposed action had sufficient merit. Quite the contrary. The respondent
    hospital argued that a
Norwich
order was only available if the
    applicant has evidence of a legal wrong done to him or her and lacks only the
    name of the wrongdoer. In rejecting that argument, Morden J.A. referred to
P.
    v. T.
, [1997] 4 All E.R. 200, [1997] I.C.R. 887 (Ch. D.), in which
Norwich
relief was granted to permit an applicant to determine if, in fact, he had a
    cause of action against a suspected wrongdoer. Morden J.A. observed, at para.
    52, that If a narrow approach to determining the elements of an action for discovery
    were to govern this case, it would be difficult to say that a
bona fide
claim is asserted in this proceeding. The applicant was unaware of what facts
    could have given rise to these letters and [h]e would like to find out so
    that he may take steps to clear his name through legal proceedings if this
    should prove necessary. At para. 53, Morden J.A. concluded in regard to the
    first
Norwich
factor:

On these facts, I do not think that the appellant should be
    "non-suited" because his claim is not a
bona fide
one, i.e.
    that his claim should fail because the threshold requirement of a
bona fide
claim has not been shown. As I have said, we are concerned with an equitable
    remedy the granting of which involves the exercise of a discretion. The general
    object is to do justice. Accordingly, I do not think that a rigid view should
    be taken of the elements of the claim. With this approach in mind, I think that
    it is reasonable to accept that sufficient
bona fides
has been shown
    to justify consideration of the case as a whole. The nature and apparent
    strength of the appellant's case is a factor to be weighed together with the
    other relevant factors in arriving at the final determination of the claim.

[56]

Morden
    J.A. concluded the applicants claim was sufficiently
bona fide
to
    escape being dismissed at the threshold level. In reaching that conclusion he
    did not scrutinize the ultimate merits of the claim too closely. He observed at
    para. 78, that even assuming the letters of reference were defamatory, there
    would still likely be defenses of justification and qualified privilege to be
    met and overcome before the applicant could succeed.

[57]

Cronk
    J.A. in
GEA
also referred to
P. v. T
. She explained, at para.
    88, that the applicant in
P. v. T
. obtained an order for pre-action
    discovery in circumstances where he was uncertain whether a tort had been
    committed so as to give rise to a cause of action. Cronk J.A. also noted with
    approval another case where pre-action discovery was ordered where its purpose was
    to obtain information required to determine whether a legal proceeding was
    appropriate. In
Isofoton S.A. v. Toronto Dominion Bank
, 85 O.R. (3d)
    780, Spence J. of the Superior Court of Justice said at paras. 46-47:

[T]he standard is that the claim must not be frivolous or vexatious,
    as opposed to higher standards imposed for other types of interlocutory relief
    such as the "strong
prima facie
" case required to obtain
    various types of injunction  [T]he applicant merely seeks an opportunity to
    discover information that may or may not lead to a claim.

[58]

What
    I draw from these authorities is that the threshold for granting disclosure is
    designed to facilitate access to justice by victims of wrongdoers whose
    identity is not known. Judicial treatment of the
Norwich
application
    procedure should reflect its nature as an equitable remedy.

[59]

There
    is no requirement that the applicant show a
prima facie
case. The
    nature and apparent strength of the applicants potential action should be
    weighed together with the other relevant factors.

[60]

The
    lower threshold at step one does not make
Norwich
relief widely
    available.
Norwich
relief is not available against a mere witness.
Norwich
relief is only available, as Lord Reid explained in
Norwich
at p. 175,
    against a person who is "mixed up in the tortious acts of others so as to
    facilitate their wrongdoing" even though this is "through no fault of
    his own". Most significantly the apparent strength of the applicants case
    may be considered in applying the other factors.

[61]

Turning
    to this case, I would not subject the appellants statement of claim to an
    exacting analysis. The statement of claim was available only because the
    application was not heard until a year after it was filed. In the typical
Norwich
application there is no statement of claim to scrutinize and the court is only
    able to consider the general parameters of a potential action the applicant may
    have.

[62]

The
    appellant claims to have a potential action under s. 138.3 of the
Securities
    Act,
which creates
statutory causes of action for
    misrepresentation in relation to the secondary market
. Subsection 138.3(2)
    creates a cause of action against a person with actual, implied or apparent
    authority to speak on behalf of a responsible issuer who makes a public oral
    statement that contains a misrepresentation that relates to the affairs of
    the responsible issuer. The responsible issuer in this case is BCE.
    Subsection 138.3(3) creates a similar cause of action for a misrepresentation
    by an influential person.

[63]

The
    appellant has difficulty establishing the elements of these causes of action.
    Without knowing who the sources are and what positions they occupied it cannot
    show that they had actual, implied or apparent authority to speak on behalf
    of BCE or were influential persons as defined in the
Securities Act
.
    Under the definition, an influential person might be an officer or an
    individual who performs functions similar to an officer. Disclosure would enable
    the appellant to ascertain this if an action under these sections is warranted.

[64]

Another
    question under both ss. 138.3(2) and s. 138.3(3) is whether the sources
    statements made to Stewart for publication contain a misrepresentation. Misrepresentation
    is defined in s. 1(1) of the
Securities Act
to mean an untrue
    statement of material fact or an omission to state a material fact. At trial,
    the appellant will have to prove a statement was both untrue and was one of
    material fact. A fact is material if it would reasonably be expected to
    have a significant effect on the market price or value of the securities.

[65]

A
    rigorous approach to these issues would lead one to the conclusion the
    application judge reached: the sources might have breached the
Securities
    Act
, but they probably did not.

[66]

For
    example, as the application judge noted, the appellant is not in a position to
    prove the statements were not true. The essence of the quotation of the source
    who was a high-level source at BCE is that BCE board would not agree to lower
    the price. That source insisted the companys embattled board had little
    appetite for lowering the price of the offer and stated Theyre at $42.75 and
    damn the torpedoes. The unfolding of events would seem to indicate these
    statements were true. The BCE board did not agree to lower the price and a few
    days later agreement was reached to close the deal at $42.75.

[67]

Another
    difficulty the appellant faces is that other published stories had also
    expressed doubt that the deal would close soon if at all. This was the basis of
    the application judges finding that the statements were not material and
    therefore "would not reasonably be expected to have a significant
    effect" on the market price or value of BCE securities.

[68]

I
    would not take a definitive view of such issues at this stage of the analysis.
    Later I explain that the goal of the amendments to the
Securities Act
that
    created
statutory civil actions for secondary market
    misrepresentation was primarily to promote compliance with the regulated
    disclosure regime rather than to compensate investors. The ambit of these statutory
    rights of action is best determined on a full record.
For example, the meaning
    of the phrase person with actual, implied or apparent authority to speak on
    behalf of a responsible issuer in s. 138.3(2) should not be judicially
    interpreted in a factual vacuum.

[69]

As
    well, the appellants litigation is still at its earliest stage. Broadly viewed,
    the general state of the negotiations, whatever the positions of the various
    parties, was related to the affairs of BCE. The confidential sources stated
    that the negotiations were almost collapsing and specifically attributed a
    timeline to a potential deal, saying that it was unlikely to proceed until the
    end of 2008. One source said, as a result, there was almost no chance BCE would
    pay out its quarterly dividend.

[70]

None
    of the other stories in the record attributed their information to a
    high-level sourceat BCE who was participating in the negotiations or to an
    executive at the bargaining table. Materiality is a complex, nuanced, fact-based
    question that is best decided on a more complete record. Moreover, it may be
    that a public oral statement by a person with actual, implied or apparent
    authority to speak or by an influential person can satisfy the requirements of
    s. 138.3(2) or (3) of the
Securities Act
even though the public oral
    statement made corresponds with general rumours that may have been published. I
    would leave for later the determination of whether the information disclosed
    was material.

[71]

The
    appellant has pleaded that the statements in the story were not true but concedes
    it cannot now prove that claim. It submits that if the confidential sources
    were telling the truth, they breached the anti-tipping provision of s. 76(2) of
    the
Securities Act
. It submits that the breach of the anti-tipping
    provision informs a common law duty of care owed to shareholders and that but
    for the unlawful tipping it would not have sustained the losses that it did.
[3]


[72]

Whether
    the statements were true, whether, if true, they constituted tipping, and the
    merits of the appellants common law claims are best left for trial or a later
    stage of the litigation. I note in passing that s. 138.13 of the
Securities
    Act
expressly preserves any common law rights of action otherwise
    available.

[73]

I
    would also leave for later the respondents argument that the appellants
    statutory-based claims were barred by the operation of ss. 138.8 and 138.14 of
    the
Securities Act
. It is not necessary to delve into the technical
    aspects of this argument. I simply note that the Chief Justice has appointed a
    five judge panel to reconsider the courts interpretation of these sections in
Sharma
    v. Timminco Ltd.
, 2012 ONCA 107, 109 O.R. (3d) 569.

[74]

Issues
    such as causation and damages are also best left for later in the litigation
    process.

[75]

In
    short, like Morden J.A. in
Straka
, I would not apply a narrow approach
    at this stage of the analysis. The appellant is not engaged in mere fishing. It
    is not seeking evidence but only the names of the alleged wrongdoers. Its
    proposed action is not frivolous. I would conclude that sufficient
bona
    fides
has been shown to justify consideration of the case as a whole. The
    apparent strength of the appellants case can be revisited in the final weighing
    of all the relevant factors together.

(b)

The second, third and
    fourth
Norwich
factors

[76]

Little
    discussion is required of the second, third and fourth
Norwich
factors. As noted above, Stewart and the Globe and Mail are somehow involved
    in the acts complained of, they are the only practical sources of the
    information, and they can be indemnified for any costs of making disclosure.

(c)

The fifth
Norwich
factor

[77]

The
    fifth
Norwich
factor is whether the interests of justice favour the
    obtaining of disclosure. This factor is broad and encompasses the interests of
    the applicant, the respondents, the alleged wrongdoers and the administration
    of justice. The interests of the respondents and the greater public interest
    sweep in their claim of journalist-source privilege. The privilege claim must
    be determined by application of the Wigmore test. In this way the
Norwich
and Wigmore tests intersect, as the application judge noted.

[78]

I
    also agree with the application judge that if the Wigmore test is satisfied by
    the media respondents, it probably will not be in the interests of justice to
    order disclosure, and on the other hand if the Wigmore test is not satisfied,
    it probably will be in the interests of justice to order disclosure.

[79]

Applying
    the Wigmore test within the
Norwich
test requires close attention to
    the placement of the onus. The onus is on the appellant to establish the fifth
Norwich
factor, but the onus is on the respondents to satisfy the Wigmore test. The
    placement of the onus was a major issue in
National Post
. In that
    case, the newspaper argued that once the first three Wigmore criteria were
    established, the onus should switch to the party seeking disclosure to show
    why, on a balance of probabilities, disclosure should be ordered. However,
    Binnie J., writing for the majority, said at para. 60, It is the media that
    advances the proposition that the public interest in protecting its secret
    source outweighs the public interest in the criminal investigation. The burden
    of persuasion therefore lies on the media.

[80]

As
    Binnie J. noted, the evidence is presumptively compellable and admissible
    until the journalist has satisfied the Wigmore test.

[81]

In
    my view the onus is on the appellant to establish all aspects of the interests
    of justice other than the respondents claim of privilege. The respondents have
    the onus of establishing their claim of privilege.

(2)

The Wigmore test

[82]

I
    set the Wigmore test out again for the sake of convenience:

(i) the communication originated in a confidence that the
    source's identity will not be disclosed;

(ii) anonymity is essential to the relationship in which the
    communication arises;

(iii) the relationship is one which
    should be sedulously fostered in the public interest; and

(iv) the public interest served by protecting the identity of
    the informant outweighs the public interest in getting at the truth.

(a)

Wigmore factors one
    and two

[83]

The
    first and second factors are easily satisfied in this case. The appellant does
    not contest that the communications originated in a confidence that the identities
    of the sources would not be disclosed and that confidence is essential to the
    relationship between Stewart and his sources.

(b)

Wigmore factor three

[84]

As
    summarized above, the application judge reasoned that as long as the journalist
    was an accredited professional with a legitimate news organization, the third
    step was readily satisfied. He rejected the appellants argument that the
    relationship should be characterized more particularly as that between
    corporate insiders who breached the securities law disclosure regime and a
    business reporter who did not comply with his own newspapers stated policy
    regarding the granting of confidentiality to sources. In rejecting this
    argument the application judge reasoned that the third and fourth steps of the
    Wigmore test must be kept analytically distinct.  I share his concern.

[85]

Characterizing
    the relationship with the narrow focus the appellant advocates, would lead to
    the two factors overlapping. Such overlapping would be unavoidable if the
    content of the impugned communication were taken into account at step three. It
    is the content of the communication that differentiates corporate sources such
    as those in this case from corporate sources who blow the whistle on companies
    defrauding the public. The content of the communication, as the application
    judge pointed out, is best analyzed at step four of the Wigmore test.

[86]

Second,
    to avoid redundancy, the public interest that is considered at step three
    must be different in nature from the public interest considered at step four.
    The redundancy can be avoided by considering, at step three, only the public
    interest in fostering the general relationship involved. A too fine
    consideration of the relationship at step three would involve public interest
    considerations that would duplicate some of the analysis at step four.

[87]

I
    find the question a difficult one, though, because the appellant is able to
    point to much language in
National Post
that might seem to support its
    position. To begin with, the appellant points to the same paragraph that the
    application judge cited. The application judge relied on Binnie J.s remark at
    para. 57 of
National Post
that the relationship between the source
    and a blogger might be weighed differently than in the case of a professional
    journalist to support the conclusion that the relationship in this case
    should be viewed generally as one between a source and a professional
    journalist. I set out the entire paragraph in which the remark appears:

The third criterion (that the source-journalist relationship is
    one that should be "sedulously fostered" in the public good)
    introduces some flexibility in the court's evaluation of different sources and
    different types of "journalists". The relationship between the source
    and a blogger might be weighed differently than in the case of a professional
    journalist like Mr. McIntosh, who is subject to much greater institutional
    accountability within his or her own news organization. These distinctions need
    not be canvassed in detail here since the appellants have made out on their
    evidence, in my opinion, that in general the relationship between professional
    journalists and their secret sources is a relationship that ought to be
    "sedulously" fostered and no persuasive reason has been offered to
    discount the value to the public of the relationship between Mr. McIntosh and
    his source(s) in this particular case.

[88]

The
    appellant submits that while Binnie J. accepted that the relationship between
    journalists and sources should be fostered in general, he left open the
    possibility that persuasive reason could be offered to discount the value to
    the public of the relationship in a particular case.

[89]

Viewing
    the relationship generally as one between a source and a professional
    journalist does not allow for any differentiation among sources. Earlier, at
    para. 40, Binnie J. said that it was not wise to grant immunity to whichever sources
    journalists deem worthy of a promise of confidentiality. The general approach
    does not allow flexibility in the court's evaluation of different sources,
    which Binnie J. specifically states this factor introduces.

[90]

The
    appellant points out that the confidential sources in this case were not
    whistleblowers shedding light on the dark corners of some private
    institutions. They breached a law that, rather than prohibiting public
    disclosure, is designed to ensure the public receives full, true, plain and
    timely disclosure of all material facts.

[91]

Characterizing
    the relationship generally also detracts from the case-by-case analysis that
    Binnie J. took great pains to emphasize must be used. As Binnie J. observed at
    para. 45 of
National Post,
there is a wide divergence even among
    legitimate news organizations. He observed that,

The evidence shows that journalistic practice varies
    considerably as to when promises of confidentiality are properly made. Many
    news organizations require the journalist to consult with an editor before
    making such a promise. Others, including the
National Post
, do not.
    What would be the criteria for such a class privilege to apply? The various
    media codes of ethics are themselves in disagreement.

[92]

The
    appellant says that the analysis of this factor should take this variety into
    account. It submits that in this case the court should take into account that
    Stewart is a business reporter, in fact the editor of the business section of
    the Globe, that he promised absolute confidentiality to the sources without
    considering whether their misconduct might contravene Ontario securities laws,
    that he was unfamiliar with those laws, that he never turned his mind to
    whether the sources might have been attempting to use him to manipulate the
    capital markets, and that the Globe and Mails
Editorial Code of Conduct
provides that journalists first ascertain why the sources are willing to
    provide the information before promising confidentiality.

[93]

Viewing
    the relationship generally at step three of the Wigmore test has the
    consequence that almost all journalist-source cases will be determined by the
    fourth Wigmore factor. The fourth Wigmore factor is arguably the most
    subjective factor. Subjectivity reduces the capacity of structured analysis to
    guide decisions.

[94]

While
    I recognize the force of the appellants argument, I am unable to accept it. In
National Post
the relationship between the professional journalist and
    the confidential source was accepted as one that ought to be sedulously
    fostered despite the fact the source appeared to be a fraudster rather than a
    true whistleblower. As noted above, focusing on the specific relationship in
    this case would result in blurring the analysis at steps three and four of the
    Wigmore test. In
National Post
Binnie J. observed that there was room
    for the law to grow and this may be an area in which it evolves further.

[95]

In
    this case I would characterize the relationship generally and conclude that the
    relationship between a journalist and a source is one that should be sedulously
    fostered in the public interest.

[96]

I
    proceed to consider the fourth Wigmore factor.

(c)

The fourth Wigmore
    Factor

[97]

The
    application judge set out the approach to the fourth Wigmore factor as
    summarized by Binnie J. in para. 64 of
National Post
. The court must
    weigh up the evidence on both sides, supplementing it with judicial notice,
    common sense, good judgment and appropriate regard for the special position of
    the media. The question, as the application judge put it at para. 69, is whether
    the public interest in protecting the identity of the informant outweighs the
    public interest in getting at the truth.

[98]

I
    begin by discussing the competing general public interests, then turn to
    matters particular to this case, and finally compare the harm that would flow
    from recognizing the privilege in this particular case with the harm that would
    flow from rejecting it.

(i)

The public interest in the medias use of confidential sources

[99]

The
    public interest in a free press is clear. Confidential sources are closely
    aligned with a free press. As Binnie J. observed at para. 28 of
National
    Post,
the public has an interest in being informed about matters of
    importance that may only see the light of day through the cooperation of
    sources who will not speak except on condition of confidentiality. He added
    that many important controversies have been unearthed only because of secret
    sources.

[100]

At para. 33,
    Binnie J. directed courts to recognize that an important element in the
    newsgathering function is the ability of the media to make use of confidential
    sources. Unless the media can offer anonymity in situations where sources would
    otherwise dry up, freedom of expression in debate on matters of public interest
    would be badly compromised and important stories would be left untold.

[101]

Anxiety among
    potential sources that journalists could be compelled to reveal their identity
    later would make it less likely these sources will provide information to
    journalists. If potential sources have to worry that a judge, after the fact,
    will override the journalists promise of confidentiality, they will not
    confide information that the public has an interest in learning through the
    media.

[102]

Professor
    Melanie Leslie of Yeshiva Universitys Cardovo School of Law put it well:
    Privilege generates the communication that the privilege protects. Eliminate
    the privilege, and the communication disappears.
[4]

(ii)

The
    public interest in compliance with the
Securities Act
is served by the
    appellants private cause of action

[103]

In this section
    I explain that the appellants proposed claim serves the public interest by
    promoting compliance with the
Securities Act
.

[104]

The
Securities
    Act
is designed to further the public interest by protecting investors and
    ensuring that capital markets are fair, efficient and transparent. These goals
    were set out in the
Report of the Attorney Generals Committee on
    Securities Legislation in Ontario
(Toronto: Queens Printer, 1965), the 
Kimber
    Report
, which forms the basis for modern Canadian securities regulation.

[105]

Consistent with
    the
Kimber Report
, s. 1.1 of the
Securities Act
states that
    the purposes of the Act are to provide protection to investors from unfair,
    improper or fraudulent practices and to foster fair and efficient capital
    markets and confidence in capital markets. Section 2.1 indicates that a
    fundamental principle of disclosure is that it be timely, accurate and
    efficient.

[106]

Section 76(2) of
    the
Securities Act
provides:

No reporting issuer and no person or company in a special
    relationship with a reporting issuer shall inform, other than in the necessary
    course of business, another person or company of a material fact or material
    change with respect to the reporting issuer before the material fact or
    material change has been generally disclosed.

[107]

The
Securities
    Act
Part XVIII sets out a Continuous Disclosure Regime (CDR) that
    regulates the flow of information to the public and prohibits deal insiders
    from communicating non-public, material information to anyone.

[108]

The Continuous
    Disclosure Regime is in place to fulfill the objectives of the
Securities
    Act
. Mark R. Gillen, in
Securities Regulation in Canada,
3rd ed.
    (Toronto: Carswell, 2007) at p.181
,
notes that the CDR implements the
    broad objective of creating and maintaining confidence in Canadian capital
    markets by providing an information base from which investment decisions can be
    made. The CDR aims to protect the public from receiving information that is
    incomplete, inaccurate or misleading. This is a broad public interest function.

[109]

Adequate
    disclosure of information about companies that issue securities to the public
    has repeatedly been recognized by securities regulators as an important part of
    protecting investors and promoting efficient capital markets.
The Toronto
    Stock Exchange Committee on Corporate Disclosure, Final Report, Responsible
    Corporate Disclosure - A Search for Balance
(March 1997), the 
Allen
    Committee Report
, which is the foundation for Part XXIII.1 of the
Securities
    Act
(entitled
Civil Liability For
    Secondary Market Disclosure)
, highlighted the importance of full and
    accurate disclosure at p. vi as follows:

The capital market system in Canada is built on a foundation of
    information  full, true and plain disclosure of all material facts in a
    prospectus and continuous disclosure of material changes and information.
    Companies are obliged to provide this information to their shareholders and the
    investing public.
Information is really the lifeblood of trading on
    securities markets.

[Emphasis added].

[110]

The Allen
    Committee concluded in its report at p. vii that there was a sufficient degree
    of non-compliance with the current continuous disclosure rules to cause
    concern. In order to promote more effective compliance with the CDR, the
    Committee recommended a limited statutory regime whereby issuers and others
    who are responsible for continuous disclosure violations may be liable in civil
    actions brought by injured investors to recover their damages. The Committees
    concern was that the sanctions available to securities regulators provide an
    inadequate deterrent.

[111]

The
    Committee also stated at p. 40 that the introduction of civil liability should
    complement existing public law enforcement mechanisms, which do not provide a
    sufficient level of enforcement on their own:

After extensive deliberations, the Committee has
    concluded that, while adequate funding for [securities regulators] is essential
    for regulation of capital markets, it will not, on its own, provide sufficient
    deterrent to continuous disclosure violations. The Committee believes that the
    additional deterrence represented by private plaintiffs armed with a realistic
    remedy will be important in ensuring compliance with continuous disclosure
    rules in Canada.
All regulators to whom the Committee has spoken, including
    representatives of the SEC, believe strongly that compliance is best
    accomplished through a combination of regulatory enforcement and private
    enforcement.
These views, in part, prompted the recommendations for a
    regime of statutory civil liability. [Emphasis added].

[112]

In 2000, the
    Canadian Securities Administrators, the umbrella organization of provincial
    securities regulators, proposed amendments to securities legislation that would
    implement the recommendations of the Allen Committee in
CSA Notice 53-302 -
    Proposal for a Statutory Civil Remedy for Investors in the Secondary Market and
    Response to the Proposed Change to the Definitions of Material Fact and
    Material Change,
(2000) 23 O.S.C.B. 7383
.
These draft
    amendments were then recommended by the CSA to their respective member
    governments.

[113]

The
CSA
    Notice 53-302
stated that the CSA was committed to advocating for the
    implementation of the amendments, so investors are empowered with the tools to
    seek redress when they suffer damages as a result of misrepresentative
    disclosure,
resulting in improved continuous disclosure in Canada
(emphasis
    added) at p. 7388. The CSA also noted how public and private regulation are
    both critical to the success of the regime: [P]rivate rights of action and
    public regulation together provide important, effective and complementary
    incentives to issuers and others involved in the prospectus process to ensure
    sound disclosure.

[114]

Bill 198,
Keeping
    the Promise For a Strong Economy Act (Budget Measures),
3
rd
Sess., 37
th
Leg., Ontario, 2002, which amended the
Securities
    Act
to include private civil liability in what is now Part XXIII.1,
    incorporated the recommendations of the Allen Committee, and generally mirrored
    the amendments put forward by the CSA. Several cases have held that the Allen
    Committees report may be used as evidence of legislative intent regarding Part
    XXIII.1
[5]
.
    The legislative history outlined above makes clear that the private causes of
    action created by Part XXIII.1 were designed to promote compliance with the
    CDR.

[115]

The Five Year
    Review Committee, struck to review the Ontario
Securities Act
, also
    supported the civil liability recommendations of the CSA in its
Five Year
    Review Committee Final Report  Reviewing the Securities Act (Ontario)
,
    (Toronto: Queens Printer, 2003). This report encouraged the coming into force
    of the Bill 198 amendments, which finally occurred in 2005. The Five Year
    Committee noted, at p. 131, one commentators letter that supported the civil
    liability amendments because, the competitiveness of the Canadian capital
    markets depends, in part, on the ability to demonstrate that Canadian
    securities laws are as protective of investors rights as those in other major
    markets.

[116]

The purpose of
    the private civil liability provisions under Part XXIII.1 is to supplement
    public enforcement in order to bolster compliance with the overall regulatory
    scheme.  Part XXIII.1 shows that the appellants proposed claim should not be
    viewed as serving solely the private interests of an aggrieved investor.
    Rather, the appellants action, based on the defendants noncompliance with the
    regulatory disclosure regime, serves the public interest by promoting
    compliance with that regime.

(iii)

The Securities Commissions decision not to investigate

[117]

The Securities
    Commissions decision not to investigate the confidential sources was important
    to the application judges final weighing up. He said at para. 72: The OSC's
    decision not to investigate was a public interest decision. Any further public
    interest in "getting at the truth" is minimal to non-existent. It is
    clear he regarded the appellants proposed action as serving purely private
    interests.

[118]

I have noted
    above that the Allen Committee considered that public law enforcement by
    securities regulators was not sufficient protection and that the additional
    deterrence represented by private plaintiffs armed with a realistic remedy
    [would] be important in ensuring compliance with continuous disclosure rules in
    Canada. Part XXIII.1 was added to the
Securities Act
as a

result
.


[119]

In this case the
    public interest in a free press is not pitted against the mere pursuit of a
    private cause of action. The appellants proposed action would serve the
    important public interest of fostering compliance with the
Securities Act
s

Continuous Disclosure Regime.

(iv)

The public interest in knowing the
    status of the transaction

[120]

The application
    judge found that news reports about when or whether the transaction would close
    were clearly in the public interest because the BCE leveraged buyout was a
    matter of national, even international, interest and importance.

[121]

As I see it, the
    publics interest in information about the transaction supports the appellant
    as much as it does the respondents. The interest and entitlement of the public
    to reliable information about the transaction is served by promoting compliance
    with the
Securities Act
s Continuous Disclosure Regime. The CDR
    regulates the source, manner, timing and content of any public disclosure about
    the transaction in order to protect the public interest.

[122]

This is not a
    case in which the sources used the media to provide the public with important
    information about corporate malfeasance that the public would not otherwise
    receive.  Both freedom of the press and compliance with the Continuous
    Disclosure Regime satisfy the publics interest in meaningful, timely, complete
    and accurate information about the status of the transaction.

(v)

The
    National Newspaper Award

[123]

The application
    judge weighed on the side of upholding the privilege the fact that the
    respondents' coverage of the BCE deal was nominated for a National Newspaper
    Award. I do not understand how the Award has any relevance to the legal issues
    that must be determined.

(vi)

Stewarts promise of confidentiality

[124]

The fact that
    Stewart gave the sources an absolute promise of confidentiality is not
    sufficient to make out the claim of privilege. At para. 69 of
National Post
Binnie J. noted that, The bottom line is that no journalist can give a source
    a total assurance of confidentiality.  He added that [a]ll such arrangements
    necessarily carry an element of risk that the source's identity will eventually
    be revealed. The risk is that the courts will determine after the fact whether
    a promise of confidentiality will be respected. He said the extent of the risk
    will only become apparent when all the circumstances in existence at the time
    the claim for privilege is asserted are known and can be weighed up in the
    balance. He noted at para. 30 that most journalistic codes of ethics
    recognize that the promise of confidentiality cannot be absolute and cited as
    an example, the Canadian Association of Journalists'
Guidelines for
    Investigative Journalism
.

[125]

Binnie J.
    explained at para. 69 that [w]hat this means, amongst other things, is that a
    source who uses anonymity to put information into the public domain maliciously
    may not in the end avoid a measure of accountability. It could not be plainer
    that in the legal regime after
National Post
, journalists and sources
    must understand that the courts may refuse to uphold the type of absolute
    promise of confidentiality that Stewart made in this case.

[126]

The respondents
    main argument in this case is that Stewarts promise of confidentiality to the
    sources should be upheld because of the importance of such promises to business
    journalism. The argument is akin to that advanced by the CCLA, and rejected, in
National Post
. Binnie J. summarized the CCLAs argument at para. 37. The
    CCLA argued that upon a journalist showing that he or she is a journalist, was engaged
    in newsgathering activity, and acquired information under a promise of confidentiality,
    the journalists right to keep the source confidential would be
    constitutionally guaranteed by s. 2(b), subject to s. 1.


[127]

The respondents

argument here does not claim constitutional protection but
    does claim the same three elements should dictate the result of the Wigmore
    test. This argument, it seems to me, risks becoming circular  the fact the
    promise was made is justification for upholding it.

[128]

In this case
    Stewart, in giving an absolute promise of confidentiality, does not appear to
    have turned his mind to the requirements of the
Securities Act,
the possible
    motivations of the sources in disclosing information to him, or why they
    consented to some identifying information being included in the story.

[129]

Nevertheless, in
    this case I would attach limited weight to the fact that absolute guarantees of
    confidentiality are not justified in law. Stewart gave his guarantees to the
    sources before the Supreme Courts decision in
National Post
. And as Binnie
    J. explained at para. 30 of that decision, The courts have long accepted the
    desirability of avoiding where possible putting a journalist in the position of
    breaking a promise of confidentiality or being held in contempt of court.

(vii)

The strength of the appellants proposed action

[130]

The strength of
    the appellants proposed action was the determining factor in the application
    judges final balancing. As noted, after conducting a searching examination of
    the merits of the appellants proposed action, he concluded it had little merit
    and would likely fail.

[131]

Subjecting the
    merits of the action to a searching examination is the approach taken by the
    dissenting judge in
National Post
. An important part of the dissents
    analysis was that there was very little prospect that the investigation would
    prove fruitful if the envelope, which was sought in that case, were ordered
    produced.

[132]

By contrast,
    Binnie J., writing for the majority, said that the the reviewing judge ought
    not to have pre-empted the forensic investigation by seemingly prejudging the
    outcome without first considering all the relevant factors in her assessment
    at para. 72. He went on to say that even if production of the envelope would be
    extremely unlikely to aid the investigation, the envelope should still be
    produced. The balancing of all the factors would still lead him to conclude
    that the injury that is likely to result from disclosure does not outweigh the
    public interest in correctly disposing of the criminal investigation.

[133]

I draw from this
    that whether the investigation was ultimately successful or not, its correct
    disposal was an important public interest.

[134]

National
    Post
involved a criminal investigation. Our system also places value upon
    the correct disposal of civil litigation.
Groupe Polygone
was a civil
    case. Lebel J. repeatedly made the point that the public interest in
    maintaining journalist-source confidentiality should be weighed against the importance
    of disclosure to the administration of justice: see paras. 17, 68, 69.

[135]

An apt
    illustration of the importance of the correct disposal of civil litigation is
    the case
M. (A.) v. Ryan
, [1997] 1 S.C.R. 157, which involved a claim
    for damages for sexual assault. The plaintiff claimed privilege in a
    psychiatrists notes of communications with her. McLachlin J. (as she then was)
    writing for the majority, remarked that there was a compelling interest in
    protecting the communications from disclosure. However, she upheld the decision
    below that the notes should be produced saying at para. 31:

More, however, is required to establish privilege. For
    privilege to exist, it must be shown that the benefit that inures from
    privilege, however great it may seem, in fact outweighs the interest in the
    correct disposal of the litigation.

[136]

The correct
    disposal of litigation is deserving of weight under the Wigmore test.

[137]

That said, the Wigmore
    test is being applied as part of the fifth
Norwich
factor. Following
    the guidance provided by Morden J.A. in
Straka
, the nature and
    apparent strength of the appellant's case is to be weighed together with the
    other relevant factors. I refer to my earlier discussion of the difficult
    hurdles the appellants action faces. The appellant has not put forward any
    evidence that the statements were false or materially misleading. I agree with
    the application judge that the fact there was a breakthrough just four days
    later does not support the inference the statements were untrue at the time
    they were made. The appellants claim that the sources had ulterior motives to
    make the statements is speculative.

[138]

On the evidence
    the appellant has put forward at this stage, I would agree with the application
    judge that the appellants action is not likely to be successful.

(viii)

The harm that would flow if the claim of privilege is rejected

[139]

The respondents
    position is that Stewarts absolute assurance of confidentiality to the sources
    should be upheld because of the importance of such promises to business
    journalism. It is worth highlighting that the argument is general and not
    specific to this case. The respondents do not argue that in this particular
    case the promise of confidentiality should be upheld because otherwise
    important undisclosed information would never have come to the attention of the
    public on this occasion. The respondents have not attempted to characterize the
    sources as whistleblowers. Rather, the respondents argue that if Stewarts
    absolute assurance of confidentiality given in this case is overridden by the
    courts, in the future all business sources, indeed all sources, will become
    more reluctant to share information with the media and the publics right to
    know will suffer generally.

[140]

This is a
    forceful argument. It loses much of its force, however, when considered in
    light of the Supreme Courts decision in
National Post
.  As noted, the
    legal regime following
National Post
is that a court may override a
    journalists absolute assurance of confidentiality. Overriding the absolute
    promise Stewart made to the sources would simply apply the legal framework of
National
    Post
and would not usher in a new state of affairs.

[141]

Given the law
    pronounced in
National Post
, a rejection of the privilege in this case
    would not result in any significant change in the confidence sources can repose
    in journalists assurances in the future. Both before and after the decision in
    this case the situation remains the same. Journalists can seek and obtain
    information from business sources. Business sources have to keep in mind their
    obligations and liabilities under the law and that they may be called to
    account.

(ix)

The harm that would flow from upholding the claim of privilege

[142]

Upholding the
    privilege would not deny the appellant a remedy. If as the appellant alleges
    the sources had actual, implied or apparent authority to speak on behalf of BCE
    or were influential persons, and if, as it alleges, the sources statements
    were false it can proceed with its statutory causes of action against BCE and
    its common law claims against BCE and Canada Inc. This observation should not
    be taken to express any view on the merits of the appellants application for
    leave under s. 138.8 of the
Securities Act
that would be necessary no
    matter who are the defendants to the action.

[143]

Upholding the
    privilege might be seen to result in the harm of providing deal insiders with comfort
    they are able to provide secret information to journalists in order to
    manipulate the markets and avoid accountability by sheltering behind
    impenetrable journalist-source protection. In my view, this potential harm
    would be greatly mitigated by the appellants action against BCE. Actions
    against responsible issuers will provide them with reason to discourage their
    officers and employees from making improper disclosures.

[144]

As I see it, upholding
    the privilege would not neutralize the legislatures efforts to reduce the
    public harm of improper corporate disclosures by adding civil remedies to the
Securities
    Act
to complement regulatory enforcement mechanisms.

(x)

The
    final weighing up

[145]

In the final
    weighing up I would conclude that the greater public interest is served by upholding
    the respondents claim of privilege. The public interest in free expression must
    always be weighed heavily in the balance. The balance may well have been
    shifted, had the apparent strength of the appellants case been compelling;
    however the appellant has not put forward such a case. Whatever the merits of
    its case, the appellant can seek a remedy from BCE and Canada Inc. The public
    interest in promoting compliance with the disclosure regime regulated by the
Securities
    Act
can be adequately served by the appellant proceeding with its action
    against BCE.

E.

Conclusion

[146]

I would conclude
    that the respondents have satisfied the Wigmore test, and hence, the appellant
    has failed to satisfy the
Norwich
test. I would dismiss the appeal.

[147]

This was a
    difficult case. Corporate executives who engage in the dangerous practice of
    providing journalists with information anonymously during the course of
    sensitive negotiations should understand the courts may not uphold a journalists
    assurances of confidentiality.

[148]

I would fix the
    successful respondents costs of the appeal in the amount of $15,000.00 all
    inclusive.

R.G. Juriansz J.A.

I agree John Laskin
    J.A.

I agree M.H. Tulloch
    J.A.

Released:





Page 1

00074

APPENDIX

The Globe and Mail (Canada)

June 30, 2008 Monday

Correction Appended

Haggling may stall BCE
    deal till year-end;

Lenders are balking at the
    purchase price as buyers dig in; theyre at $42.75, and damn the torpedoes

BYLINE:
SINCLAIR STEWART

SECTION:
REPORT ON BUSINESS: CANADIAN; TELECOM: TAKEOVERS; Pg.
    B1

LENGTH:
781 words

DATELINE:
NEW YORK

The
    problem-plagued $35-bilion takeover of
BCE Inc.
will likely be delayed
    until the end of the year, owing to increasingly fractious negotiations between
    the companys private equity buyers and a syndicate of lenders who are pushing
    to lower the value of the buyout, according to people involved in the
    negotiations.

Sources
    close to the talks say the banks financing the deal are balking at the proposed
    purchase price of $42.75 a share, and are instead insisting that the company
    should be valued on the same basis as rival Telus Corp., which would imply a
    steeply discounted price of between $35 and $38 a share.

The
    banks are also seeking stricter covenants, more favourable interest rates on
    their loans and a host of other concessions that the buyers, led by the Ontario
    Teachers Pension Plan and New Jersey-based Providence Equity Partners, believe
    go well beyond the bounds of the commitment letters these lenders signed last
    June.

Although
    the two sides are still talking, several sources described the tenor of the
    discussions as grinding and suggested that the parties remain far apart on a
    number of key issues.

The
    plan was for BCE and its banks to begin marketing the deal to investors in
    mid-July, and then close it some time before the end of the third quarter. But
    participants now say that schedule is wildly optimistic, and have not ruled out
    the possibility that the private equity buyers will have to sue the banks to
    put the buyout back on track. Citigroup Inc., Deutsche Bank AG, Royal Bank of
    Scotland PLC and Toronto-Dominion Bank are helming the $32-billion debt
    package.


Page 2

00075

Haggling may stall BCE till year-end; Lenders are
    balking at the purchase price as buyers dig in; theyre at $42.75, and damn
    the torpedoes The Globe and Mail (Canada) June 30, 2008 Monday Correction
    Appended

Everyone
    has underestimated when this deal gets done, said one executive at the
    bargaining table. Its Christmas.

The
    source added he did not think the buyers and the banks would reach an agreement
    over the financing terms this summer, if at all.

BCE
    is expected to announce today whether it will pay out its $294-million
    quarterly dividend or retain the cash to improve its balance sheet and provide
    added comfort to nervous lenders. Sources say given the current uncertainty
    around the acquisition, there is almost no chance BCE will pay out the money.

If
    the deal doesnt close until year end, that could mean the companys cash
    position could be bolstered by an additional $900-million.

The
    company and its buyers have received all the regulatory approvals needed to move
    forward by todays deadline, though the bank financing remains tenuous.

Two
    high-level sources, one at BCE and another that is participating in
    negotiations, insisted that the companys embattled board has little appetite
    for lowering the price of the offer. That would necessitate another shareholder
    vote, another round of court and regulatory approvals, and perhaps another
    years worth of delays. It would also be a black mark on the BCE directors, who
    were roundly criticized last year for running a clumsy auction.

Theyre
    at $42.75, and damn the torpedoes, said one of the sources.

If
    the board holds fast, the buyers and banks will have to find compromises in
    other places, such as covenants and rates. It appeared they were close to such
    an agreement in late May, but talks fell apart after a surprise Court of Appeal
    decision froze the deal, ruling BCE failed to take into account the interests
    of its bondholders when it agreed to be taken over in the largest private
    equity transaction in history.

The
    Supreme Court overruled that decision this month, paving the way for talks to
    resume, but the banks have dug their heels in deeper since then, according to
    people familiar with the matter.

A
    spokeswoman for the bank syndicate said the banks stand by their earlier
    commitment to the deal.

The
    banks issued a statement after BCE won its Supreme Court ruling that said they
    expect that the transaction will close in accordance with the  agreement.

Officials
    at BCE and the private equity buyers declined to comment.

The
    four banks pledged to supply what they called a term loan A facility worth
    $4.2-billion and a $16.5-billion term loan B facility when the deal was
    struck 12 months ago.


Page 3

00076

Haggling may stall BCE till year-end; Lenders are
    balking at the purchase price as buyers dig in; theyre at $42.75, and damn
    the torpedoes The Globe and Mail (Canada) June 30, 2008 Monday Correction
    Appended

Some
    of these banks, however, managed to wring price concessions from Clear Channel
    Communications Inc., after a similar fight with that company and its private
    equity buyers. The two sides compromised amid a legal battle in which Clear
    Channel alleged the lenders were not living up to their commitments.

Sources
    say that has emboldened the banks in the current negotiations.

Although
    Teachers and Providence have not ruled out suing their lenders if their
    stalemate continues, this is viewed as a last resort, sources said.

BCE
    INC. (BCE)

Fridays
    close: $36.76, down 25¢

LOAD-DATE:
July 1, 2008

LANGUAGE:
ENGLISH

CORRECTION-DATE:
July 1, 2008

CORRECTION:
Providence Equity Partners is based in Rhode Island.
    Incorrect information was published yesterday.

PUBLICATION-TYPE:
Newspaper

Copyright 2008 The Globe and Mail, a division of
    CTVglobemedia Publishing Inc.

All Rights Reserved.





[1]
The entire article is reproduced as an appendix to these reasons.



[2]
Section 2(b) of the Charter guarantees the fundamental freedom of expression
    including freedom of the press and other media of communication.



[3]
If the statements were true, the appellant would not have a private right of
    action under the
Securities Act
for insider tipping. The private right
    of action for insider tipping, created by s. 134(2), only provides recourse to
    persons who sell securities to, or purchase securities from, the person who
    obtained the inside information from the insider.



[4]

Melanie B. Leslie,
The Costs of Confidentiality and the
    Purpose of Privilege
, (2000) Wis. L. Rev 31 at 31.



[5]
See e.g.
Ainslie v. CV Technologies Inc.
(2008), 93
    O.R. (3d) 200 (S.C.) at paras. 7-13;
Silver v. Imax Corp.
(2009), 66
    B.L.R. (4th) 222 (Ont. S.C.) at paras. 225-231;
Frank v. Farlie, Turner
    & Co.
, 2012 ONSC 5519 at paras. 71-77.
Abdula v. Canadian Solar Inc.
,
    2012 ONCA 211, at paras. 50-66


