


COURT OF APPEAL FOR ONTARIO

CITATION:
TPG
    Technology Consulting Ltd. v. Canada
(Industry Canada), 2012 ONCA 87

DATE: 20120208

DOCKET: C54240

Sharpe, Blair and Rouleau JJ.A.

BETWEEN

TPG Technology Consulting Ltd. and Donald Powell

Plaintiffs (Appellants)

and

Her Majesty the Queen in Right of Canada as
    represented by the Minister of Industry Canada and as represented by the
    Competition Bureau of Canada, John Pecman, Sheridan Scott and Stephen
    Fitzpatrick

Defendants (Respondents)

Charles Gibson for TPG Technology Consulting Ltd.

Alexandre Kaufman, for the Her Majesty the Queen in
    Right of Canada

Heard: January 6, 2012

On appeal from the order of Justice Stanley Kershman of
    the Superior Court of Justice, dated July 28, 2011, with reasons reported at
    2011 ONSC 4604, [2011] O.J. No. 3511.

Sharpe J.A.:

[1]

The issue on this appeal is whether the motion judge erred by striking
    out a defamation claim on a rule 21.01(1) pleadings motion on the ground that
    the allegedly defamatory words are not capable of bearing defamatory meaning.

[2]

The appellants claim arises out of a bid-rigging investigation and
    inquiry conducted by the Competition Bureau that led to charges against the
    appellants and several other parties under the
Competition Act
, R.S.C.
    1985, c. C-34, s. 47. In their amended statement of claim, the appellants
    allege that the charges, and the manner in which the charges were announced to
    the public, were part of a deliberate and malicious effort by the respondents
    to discredit and harm the appellants. The respondents say that they merely
    reported the fact that the appellants had been charged with bid-rigging and
    that the statements are not capable of bearing a defamatory meaning.

FACTS

[3]

The appellant TPG Technology Consulting Ltd. (TPG) specializes in
    providing professional information technology (IT) services to public and
    private corporations and has been a major supplier of IT services to the
    federal government. The appellant Powell is the sole shareholder of TPG.

[4]

In 2006, the Competition Bureau commenced an inquiry into bid-rigging
    allegations against fourteen individuals and seven companies, including the
    appellants. The appellants and others were suspected of coordinating their bids
    for IT service contracts with the federal government in violation of the
Competition
    Act
. On February 17, 2009, at the request of the Competition Bureau, the
    Attorney General filed criminal charges against the suspected companies and
    individuals. On that same day, the Bureau announced the charges in a press
    release on its website. The website provides details regarding the
Competition
    Act
and the type of conduct it seeks to deter. Media outlets published a
    number of articles regarding the Bureaus inquiry into the appellants conduct
    based on information posted on the Bureaus website.

[5]

In their amended statement of claim, the appellants allege that the
    Bureau defamed them in two separate ways:  (i) in their own internet postings;
    and (ii) by providing information that formed the basis of various media publications.

[6]

The alleged defamatory words that have been disseminated on the Bureaus
    website:

A
s a result of the agreement, the bidders were
    allegedly

able to maximize the
    rates at which services were to be provided to the various departments.




the Bureaus best weapons to combat these
    secret criminal anti-competitive agreements.



Some recent studies suggest that in cases
    where bid- rigging occurs, the price paid for the good or service typically
    increases by about 20 percent.



The Bureau found evidence indicating that
    several IT services companies in the National Capital Region secretly
    coordinated their bids in an illegal scheme to defraud the government by
    winning and dividing contracts, while blocking out honest competitors.



Bid-rigging is a criminal offence where
    bidders secretly agree not to compete or to submit bids that have been
    pre-arranged among themselves.  Their goal is to thwart the competitive
    tendering process and inflate prices to purchasers.

Bid-rigging charges under s. 47 of the Competition Act. Charges
    laid against 7 companies and 14 individuals based on allegations that the
    parties entered into agreements to coordinate their bids in an illegal scheme
    to defraud the government by winning and dividing contracts for information
    technology services

[7]

Similar statements were published by various media outlets in Ontario,
    and in other provinces, allegedly as a result of the information provided by
    the respondents. The media reports stated,
inter alia
, that:

bid-rigging is a lot like price-fixing - with the aim of
    secretly agreeing to get as much money as possible out of each contract. The
    bureau says it can inflate prices by as much as 20%.

an illegal scheme to defraud the government by winning and
    dividing contracts, while blocking out honest competitors.

In a statement, the interim Commissioner of Competition said
    the alleged infractions increased the final price of the services to the
    government.

[8]

The amended statement of claim also asserts a claim of abuse of public
    office. The appellants allege that the investigation and bid-rigging charges,
    and the dissemination of the defamatory statements, were a direct response to a
    lawsuit commenced by the appellant TPG against Public Works Government Services
    of Canada. The lawsuit alleges irregularities during a bidding process in which
    CGI, one of TPG's competitors, was selected as the supplier of services
    previously supplied by TPG. The appellants further allege that the
    investigation, charges, and dissemination of the defamatory statements, were an
    intimidation tactic in response to the appellant Powells testimony before a
    Parliamentary standing committee alleging that the Minister of Public Works was
    guilty of conflict of interest in relation to the CGI contract.

ISSUES

1.       Did
    the motion judge err in striking out the defamation claim under rule 21.01 on
    the ground that the impugned statements are not capable of bearing defamatory meaning?

2.       Is
    the defamation claim arising from alleged defamatory statements in Ontario media
    barred because the appellants failed to give timely notice pursuant to the
Libel
    and Slander Act
, s. 5(1)?

ANALYSIS

1.

Did the motion judge err in striking out the
    defamation claim under rule 21.01 on the ground that the impugned statements
    are not capable of bearing defamatory meaning?

[9]

It is well-established that it is only where it is plain and obvious
    that the impugned statement is not capable of bearing defamatory meaning that a
    motion under rule 21.01 will succeed:
Mantini v. Smith Lyons LLP
(2003), 64 O.R. (2d) 516 (C.A.).

[10]

The motion
    court judge appropriately characterized the issue, at para. 18 of his reasons,
    as whether the respondents went beyond simply stating that the [appellants]
    had been charged with bid-rigging; specifically, did they imply that the
    plaintiffs engaged in conduct more serious and blameworthy than bid-rigging.

[11]

A report
    that someone is under investigation or that they have been arrested for, or
    charged with, a criminal offence is not considered the equivalent of saying
    that the person has committed the crime unless there is something in the
    language of the report that suggests the plaintiffs guilt: Raymond E. Brown,
Brown
    on Defamation
, loose-leaf, (Toronto: Carswell, 2011), ch.4 at pp. 4-165 to
    4-166; Roger D. McConchie & David A Potts,
Canadian Libel and Slander
    Actions
, (Toronto: Irwin Law Inc., 2004) at p. 516.  However, reports of
    arrest or charges will be capable of conveying a defamatory meaning, where it
    is stated, either directly or by clear implication, that an offence has been
    committed, and the qualifications contained in any of the surrounding
    statements are not sufficient to outweigh or nullify the effect of what appears
    to be a plain statement of fact:
Shave v. West Australian Newspapers Ltd.,
[2000] W.A.S.C. 172 (S.C.) at para. 29.

[12]

A
    distinction is drawn between reports which are thought to do no more than
    state that a person is under investigation or has been charged with a criminal
    offence and reports which assert directly, or by clear implication, that the
    plaintiff has been involved in acts amounting to a criminal offence; the
    former are generally not considered capable of a defamatory meaning while the
    latter are:
Shave v. West Australian Newspapers Ltd.
, [2000] W.A.S.C.
    172 (S.C.) at para. 28; Raymond E. Brown, Brown on Defamation, ch.4 at 4-168.

[13]

The law in
    this area has been most clearly articulated in the Australian case,
Mirror
    Newspapers Ltd. v. Harrison
[1982] HCA 50; (1982) 149 C.L.R. 293, per
    Mason J. at pp. 300-01:

The ordinary reasonable reader is mindful of the principle that
    a person charged with a crime is presumed innocent until it is proved that he
    is guilty. Although he knows that many persons charged with a criminal offence
    are ultimately convicted, he is also aware that guilt or innocence is a
    question to be determined by a court, generally be a jury, and that not
    infrequently the person charged is acquitted.



A distinction needs to be drawn between the readers
    understanding of what the newspaper is saying and judgments or conclusions
    which he may reach as a result of his own beliefs and prejudices. Its one
    thing to say that a statement is capable of bearing an imputation of defamatory
    of the plaintiff because the ordinary reasonable reader would understand it in
    that sense, drawing on his own knowledge and experience of human affairs in
    order to reach that result. It is quite another thing to say that a statement
    is capable of bearing such an imputation merely because it excites in some
    readers a belief or prejudice from which they proceed to arrive at a conclusion
    unfavourable to the plaintiff. The defamatory quality of the published material
    is to be determined by the first, not by the second, proposition.

[14]

The
    question in this case is, therefore, do the statements complained of go beyond
    simply stating that the appellants have been charged with a criminal offence?
    For the following reasons, I conclude that when the amended statement of claim
    is fairly read as a whole, the question of whether the impugned statements are
    capable of bearing a defamatory meaning raises issues of fact that are not
    susceptible of being determined on a pleadings motion.

[15]

The motion
    judge appears to have failed to distinguish between the two stages of the
    process to be followed when determining whether the impugned statements were
    capable of defamatory meaning. The first stage requires a determination of whether
    the impugned expression is
capable
of bearing a defamatory meaning.
    This is a question of law and has been referred to as the gatekeeper function:
    see
Mantini v. Smith Lyons LLP
(2003), 64 O.R. (3d) 516 at para. 11;
Laufer
    v. Bucklaschuk
(1999), 181 D.L.R. (4
th
) 83 (Man. C.A.) at para.
    25, leave to appeal to SCC refused (2000), 189 D.L.R. (4
th
) vii
    (S.C.C.); Roger D. McConchie & David A Potts,
Canadian Libel and
    Slander Actions
, at p.

295.

[16]

The
    question of whether the words
actually conveyed
those meanings, on the
    other hand, is a question of fact: see, for example,
Young v. Toronto Star
    Newspapers Ltd.
(2005), 259 D.L.R. (4
th
) 127 (Ont. C. A.) at para.
    68;
Laufer v. Bucklaschuk
(1999), 181 D.L.R. (4
th
) 83 (Man.
    C.A.) at para. 25, leave to appeal to SCC refused (2000).

[17]

The motion
    judge did not advert to the two-stage process and appears to me to have
    conflated the initial threshold legal issue with the second factual issue that
    properly belonged to the trier of fact. He concluded, at para 23, that the
    Bureaus statement that the appellants objective was to maximize the rate they
    would charge for their services [was] a fair characterization of what the
    plaintiffs sought to achieve by engaging in bid-rigging. Similarly, at para.
    24, the motion judge found that statements to the effect that the appellants
    had secretly coordinated their bids to illegally defraud the government was
    a fair characterization of the charges to which [sic] the plaintiffs were
    accused.

[18]

In my
    view, in the context of this case, the question whether the statements made by
    the respondents were a fair characterization of the charges against the
    appellants involved issues of fact and belongs to the second stage of the
    two-stage analysis. It was not appropriate for the motion judge to make those findings
    on the material before him on a rule 21.01(1) motion.

[19]

It is
    common ground that to establish bid-rigging, the Crown does not have to prove
    that prices were inflated or that anyone was defrauded. While avoidance of
    inflated prices and fraud are undoubtedly the underlying rationale for the
    creation of the offence of bid-rigging, they are not ingredients or elements of
    the offence.

[20]

In the
    amended statement of claim, the appellants specifically deny that prices were
    inflated or that the government was defrauded. The appellants also allege that
    the respondents made these statements despite their knowledge that these
    allegations are unfounded and that [t]he purpose of the defamatory statements
    was to discredit and attack the credibility of the [appellants] and to damage
    the [appellants] ongoing business with the Government of Canada.

[21]

Moreover,
    it would appear that at the appellants upcoming trial, neither fraud nor
    inflated prices will form any part of the Crowns case. The reasons of the
    preliminary inquiry judge committing the appellants for trial quote the theory
    advanced by the Crown:

The theory of the Crown is that the accused decided to unify
    their efforts to win all the contracts from various RFPs. To achieve that
    result, they would participate in numerous meetings, communicate (orally and in
    writing), share information about technical requirements and pricing of bids,
    delegate to each other a role in the preparation of the bids, maintain a
    tracking list which identifies the parties, the winning RFPs, their
    resources, the prices, the contracts awarded, and acted collectively in responding
    to the authorities or in dealing with the contracts awarded.

[22]

It is also
    important to read the statement of claim as a whole. The defamation claim is
    closely linked to the abuse of public office claim. The appellants allege that
    the statements supporting the defamation claim were part and parcel of a
    deliberate and malicious attempt to discredit them and to intimidate them so
    that they would not continue their lawsuit alleging that the government and the
    Minister of Public Works acted in conflict of interest.

[23]

We are,
    then, left with this. It is at least arguable that the impugned statements suggest
    that the appellants were guilty of fraud and price inflation. These allegations
    need not be proven as elements of the offences charged, nor did they form any
    part of the case that the Crown led at the preliminary inquiry. They are also strenuously
    denied by the appellants, who plead that they are part of a deliberate and
    malicious attempt to discredit and harm the appellants.

[24]

When that
    entire context is taken into account, it is my view that it cannot be said that
    it is plain and obvious that the impugned statements are not capable of bearing
    a defamatory meaning. The determination of that issue is better left to trial
    on a full factual record.

[25]

I hardly
    need add that I make no comment as to whether there is any basis in fact for
    these very serious allegations. What I will say, however, is that at this stage
    of the proceedings when we only have before us the appellants version of the
    facts, these are not matters that can be resolved on a pleadings motion and
    that the best and fairest course is to allow the entire matter to proceed to
    trial.

2.  Is the defamation claim arising from alleged
    defamatory statements in Ontario media barred because the appellants failed to
    give timely notice pursuant to the Libel and Slander Act, s. 5(1)?

[26]

As I have already noted, the amended statement of claim alleges that
    the respondents provided the media with false and defamatory information about
    them which formed the basis of several media articles. Several of the publications
    in which the allegedly defamatory statements appeared are Ontario publications.
    In response to a request to admit, the appellants admitted that they did not
    provide notice of their claim pursuant to s. 5 (1) of the
Libel and
    Slander Act
, R.S.O. 1990, c. L-12, which states:

Notice of action

(1)  No action for libel in a newspaper or in a broadcast lies
    unless the plaintiff has, within six weeks after the alleged libel has come to the
    plaintiffs knowledge, given to the defendant notice in writing, specifying the
    matter complained of, which shall be served in the same manner as a statement
    of claim or by delivering it to a grown-up person at the chief office of the
    defendant.

[27]

As the motion judge struck the entire defamation
    claim, he did not deal with this issue.

[28]

The appellants argue that no notice was required
    on the ground that their claim is for slander for transmitting words to the
    media rather than for the publication of the words by the media.

[29]

I am unable to accept that submission.

[30]

In my view, it is clear from the amended
    statement of claim that the appellants did not plead a claim for slander. That
    claim would necessarily be limited to damages flowing from the communication
    and not include damages flowing from the publications that followed. Rather,
    the appellants are alleging that the respondents were the source of the
    allegedly defamatory information that was published by the media and which,
    they say, caused damage to their reputation. As framed, the claim for
    defamation is based on the fact that the information was published in a
    newspaper or in a broadcast and the notice requirement imposed by s. 5(1)
    therefore applies.

[31]

As explained by
Brown on Defamation
,
    at pp. 7-30 to 7-31, a person who communicates a defamatory remark to a
    newspaper will be held responsible for libel, rather than slander, as though he
    or she published it him- or herself:

Thus, it has been said by the Supreme Court of
    Canada that a person who communicates a defamatory remark to a newspaper
    reporter will be deemed to have authorized that reporter to publish the remark
    in the newspaper and will be held responsible as though he published it
    himself.  []  If the defamation is published in the newspaper, the
    liability will sound in libel rather than slander even if the defendant
    communicated it orally to the reporter

[32]

The rationale behind s. 5(1) is to give a
    defendant an opportunity to correct, retract, justify, apologize for, or
    otherwise consider what mitigating steps are appropriate :
Siddiqui
    v. Canadian Broadcasting Corporation

(2000), 50 O.R. (3d)
    607 (C.A.) at para. 16. The section and the rationale have been applied to
    non-media defendants by several decisions of this court:
Janssen-Ortho
    Inc. v. Amgen Inc.
(2005), 256 D.L.R. (4
th
) 407 (Ont. C.A.);
Watson v. Southam Inc.
(2000), 189 D.L.R. (4
th
) 695
    (Ont. C.A.);
DeHeus v. Niagara Regional Police Services Board
[2001] O.J. No. 4201 (C.A.);
Weiss v. Sawyer
(2002), 61 O.R. (3d) 526 (C.A.). In
Watson v. Southam
    Inc.
,
Weiler J.A. noted that the application of the
    section to non-media defendants had been criticized, but concluded that the
    parties had not made out a case for overruling it. The same observation applies
    to this case.

[33]

Accordingly,
    I conclude that to the extent the claim for defamation rests upon allegedly
    defamatory statements published or broadcast by media in Ontario, it should be
    struck out on the ground that the appellants failed to give the notice required
    by s. 5(1).

DISPOSITION

[34]

Accordingly,
    I would allow the appeal, set aside the order dismissing the claim for
    defamation and in its place, substitute an order striking only those paragraphs
    of the amended statement of claim resting on defamatory statements published or
    broadcast by media in Ontario.

[35]

In view of
    the divided success, I would award the appellants costs fixed in the amount of
    $7,500 inclusive of disbursements and HST.

Robert J. Sharpe J.A.

I agree R.A. Blair
    J.A.

I agree Paul Rouleau
    J.A.

Released: February 8, 2012


