Isolate Boards – Appendix B

Transfer of assets and liabilities

13.6.1 (1) Upon the merger of an isolate board with its successor board, the assets and liabilities of each isolate board are transferred to its successor board and its receiving board, if any, as follows:

1. For The Hornepayne Roman Catholic Separate School Board,

i. any assets of the board that were purchased with funding provided under the agreement between the Province of Ontario and the Government of Canada entitled “Entente Canada – Ontario relative à l’enseignement dans la langue de la minorité et à l’enseignement de la seconde langue officielle 2005-2006 à 2008-2009” are transferred to the Conseil scolaire de district catholique du Nouvel-Ontario,
ii. 50 per cent of the value of the board’s school site is transferred to the Huron-Superior Catholic District School Board and 50 per cent to the Conseil scolaire de district catholique du Nouvel-Ontario, and
iii. all other assets and liabilities of the board are transferred to the Huron-Superior Catholic District School Board to be held in trust by it until that board and the Conseil scolaire de district catholique du Nouvel-Ontario determine how the assets and liabilities are to be distributed between them.

2. For The Moosonee Roman Catholic Separate School Board,

i. any assets of the board that were purchased with funding provided under the agreement between the Province of Ontario and the Government of Canada entitled “Entente Canada – Ontario relative à l’enseignement dans la langue de la minorité et à l’enseignement de la seconde langue officielle 2005-2006 à 2008-2009” are transferred to the Conseil scolaire de district catholique des Grandes Rivières,
ii. 95 per cent of the value of the board’s school site is transferred to the Northeastern Catholic District School Board and 5 per cent to the Conseil scolaire de district catholique des Grandes Rivières, and
iii. all other assets and liabilities of the board are transferred to the Northeastern Catholic District School Board to be held in trust by it until that board and the Conseil scolaire de district catholique des Grandes Rivières determine how the assets and liabilities are to be distributed between them.

3. For The Northern District School Area Board,

i. the school site for the school located in the Township of Armstrong, all property in the school and all assets and liabilities associated with the school are transferred to the Lakehead District School Board,
ii. the school site for the school located in the town site of Savant Lake, all property in the school and all assets and liabilities associated with the school are transferred to the Keewatin-Patricia District School Board, and
iii. all other assets and liabilities of the board are transferred to the Lakehead District School Board to be held in trust by it until that board and the Keewatin-Patricia District School Board determine how the assets and liabilities are to be distributed between them.

4. For The Red Lake Area Combined Roman Catholic Separate School Board,

i. any assets of the board that were purchased with funding provided under the agreement between the Province of Ontario and the Government of Canada entitled “Entente Canada – Ontario relative à l’enseignement dans la langue de la minorité et à l’enseignement de la seconde langue officielle 2005-2006 à 2008-2009” are transferred to the Conseil scolaire de district catholique des Aurores boréales, and
ii. 75 per cent of the value of the board’s school site is transferred to the Kenora Catholic District School Board and 25 per cent to the Conseil scolaire de district catholique des Aurores boréales, and
iii. all other assets and liabilities of the board are transferred to the Kenora Catholic District School Board to be held in trust by it until that board and the Conseil scolaire de district catholique des Aurores boréales determine how the assets and liabilities are to be distributed between them.

5. For all other isolate boards, all assets and liabilities of the isolate board are transferred to the successor board for the isolate board.

(2) Despite subsection (1), on September 1, 2009, the financial obligations of boards in respect of membership in the Northern School Resource Alliance are transferred to the Lakehead District School Board, to be held in trust by it on behalf of such boards.

(3) On and after September 1, 2009, the Lakehead District School Board shall ensure that the Northern School Resource Alliance provides services to the boards for which financial obligations were transferred under subsection (2) until the services are no longer required, at which time the Lakehead District School Board shall wind up the Northern School Resource Alliance.

Isolate Boards – Appendix A

Restrictions on isolate boards

13.5

(1) After May 31, 2009, an isolate board shall not do any of the following things without the prior approval of the Minister or unless it is done in accordance with the board’s estimates of its revenues and expenditures prepared under subsection 231 (1) of the Act for the 2008-2009 school year, as reviewed by the Minister:

1. Pass a by-law or resolution relating to a payment.
2. Convey an interest in property or purchase an interest in property.
3. Transfer money between or among reserve funds or change the purpose or designation of a reserve fund.
4. Enter into a contract, make a payment in connection with the end of a contract or incur a financial liability or obligation.
5. Appoint a person to a position, hire a new employee or promote an existing employee.
6. Make or agree to make a payment in connection with the end of an employment contract or employment relationship. O. Reg. 212/09, s. 6.

(2) The Minister may approve the things listed in subsection (1) for the purposes of that subsection and may impose any conditions he or she considers necessary. O. Reg. 212/09, s. 6.

(3) Despite subsection (1), an isolate board may do any of the things listed in that subsection in the case of an emergency. O. Reg. 212/09, s. 6.

(4) Subsection (1) shall not be construed to prevent an isolate board from fulfilling its obligations under any contracts entered into before June 1, 2009. O. Reg. 212/09, s. 6.

(5) Paragraphs 5 and 6 of subsection (1) shall not be construed to affect the employment relationship between an employee and a board or their respective rights against, and obligations to, each other, including under any collective agreement. O. Reg. 212/09, s. 6.

(6) Members, officers, employees and agents of each isolate board shall, on request, permit the Minister or a representative of its successor board to,

(a) enter and inspect the premises and to meet with the members, officers, employees and agents of the isolate board; and
(b) examine and copy any document, record or other information in the possession of the board. O. Reg. 212/09, s. 6.

Isolate Boards – Amalgamation

OVERVIEW

In what is said to be an effort to provide students and teachers from the District School Area Boards (“DSABs”) with the same resources and supports of their District School Board (“DSB”) counterparts, as well as to improve support for Aboriginal students and increase student achievement, the McGuinty government is merging virtually all DSABs with the DSBs.  One of the options for the provincial government was to dissolve the DSABs, which would have resulted in the sale of assets, terminations and school closures. Instead, under the provincial plan, the DSABs will merge with DSBs on September 1, 2009.

Not all DSABs will be merged. The three school authorities located in the lower James Bay area (James Bay Lowlands Secondary School Board, Moose Factory Island District School Area Board, and Moosonee District School Area Board) as well as the Penetanguishene Separate School Board will remain DSABs, for at least some time period.

This report will highlight the important changes to assist School Boards through the merger. The wheels of change have already been set in motion. The legislation that has been drafted to effect the changes is, at face value, relatively simple and very brief. However, there is no doubt that, although simple on its face, the legislation will profoundly alter the educational landscape in Ontario. This restructuring of the northern school boards by the Ontario government is without a doubt Ontario’s largest educational restructuring since the days of Premier Mike Harris.

THE MERGER ON SEPTEMBER 1, 2009: How will it happen?

On September 1, 2009, virtually all of Ontario’s DSABs will merge with one or more corresponding DSBs. To properly understand how the DSABs will be merged with the DSBs, it is essential to understand how the DSABs came into existence.

The DSABs are created in part by s. 59 of the Education Act. Under s. 59, the DSABs’ jurisdiction is limited, essentially, to territorial districts outside the jurisdiction of DSBs. The DSBs jurisdiction is established under provincial Regulation 486/01 (“Regulation 486/01”). Section 4 of Regulation 486/01 parcels-out the various DSBs’ jurisdictions.

The majority of the mergers that will take place on September 1, 2009 will be accomplished in a six part process. All of the parts will occur on September 1, 2009 in this order:

1) The provincial legislature, through Regulation 212/09 has amended s. 4 of Regulation 486/01 to expand the jurisdictions of the DSBs to envelop virtually all of the territorial districts currently under the jurisdiction of the DSABs.

2) The employees of the DSABs will be transferred to the DSBs.

3) Immediately after the employees are transferred to the DSBs, the DSABs and the DSBs will merge.

4) Upon merger, the assets and liabilities of the Isolate Boards are transferred to the DSBs.

5) The interests of electors of the various Isolate Boards are then represented by specific trustees of the DSBs.

6) Former Isolate Board trustees will be “advisors” until November 30, 2010 and will be notified and consulted on matters previously under their jurisdiction, and receive an honorarium until November 30, 2010.

The mergers of the Hornepayne RCSSB, Moosonee RCSSB, Red Lake RCSSB, and Northern District School Area Board to corresponding DSBs will be subject to additional rules under Regulation 486/01 (see below).

Summary

The provincial legislature has restructured the jurisdiction of the DSBs so that virtually every school section currently occupied by the DSABs will be annexed by an enumerated DSB. The DSABs (also called Isolate Boards under Regulation 486/01) will merge with a corresponding DSB (also called a Successor or Receiving Board under Regulation 486/01). See table 1 attached at the end of the report for a list of which Isolate Boards will be merging with which Successor/Receiving Boards.

THE NEW REGULATION: Tweaking the merging provisions

On August 14, 2009 the Ontario government filed a new regulation (Regulation 309/09) which had the effect of further amending Regulation 486/01. The most salient provisions of Regulation 309/09 are as follows:

• merging each of the Hornepayne RCSSB, Moosonee RCSSB, and the Red Lake RCSSB into a respective English and French DSB
• allocation and distribution of the Hornepayne RCSSB, Moosonee RCSSB, and the Red Lake RCSSB assets, resources, personnel and liabilities to the English and French DSBs
• merging the Northern District School Area Board into not one but two DSBs
• allocation and distribution of the Northern DSAB assets, resources, personnel and liabilities to two receiving DSBs
• the treatment of DSAB Trustees
• the treatment of the Northern School Resource Alliance.

These provisions are dealt with in greater detail below.

THE  TRANSITION TEAMS

The provincial Government created “Transition Teams” that are currently working with both the DSABs and the receiving DSBs.   The teams are comprised of Ministry of Education staff in a variety of branches – Transfer Payments and Finance Branch, Capital Programs, Field Services, plus others.

The teams are led by Education Officers in the Ministry Regional Offices to which the DSABs are attached (Barrie, Thunder Bay, Sudbury/North Bay and Ottawa).

The Transition Team Leaders are located in Thunder Bay, one in Sudbury/North Bay and one in Ottawa.  The Leaders work the other members of the Transition Team to respond to questions that put forth from the DSABs and DSBs and to facilitate the merging process.. They are described by the Ministry as the “go to” person for the School Boards. The teams will remain in place following September 1, 2009 when the mergers take effect and will stay in place as long as necessary.

EFFECTS OF THE MERGER

The effects of the merger will be both dramatic and substantial. The effects will be especially important in relation to education labour and employment relations and education governance. Unfortunately, as mentioned above, the legislation responsible for affecting the merger is silent on several pertinent issues that will have to be addressed by the School Boards in the upcoming months or even years. The remainder of this report attempts to present the more salient consequences of the merger on both the DSABs and DSBs alike. These issues are:

1. Interim restrictions on DSABs;
2. Integration of former DSAB non-unionized employees;
3. Integration of former DSAB unionized employees;
4. Treatment of former DSAB Trustees;
5. Allocation and distribution of DSAB assets, and liabilities of DSABs;
6. Treatment of the Northern School Resource Alliance;
7. Funding for DSBs going forward.

1.  Interim Restrictions on the DSABs

Beginning May 31, 2009, virtually all DSABs were prohibited from engaging in certain conduct by way of s. 13.5(1) of Regulation 486/91. The regulation essentially freezes the DSABs and prohibits them from, amongst other things, incurring liabilities, conveying or acquiring property, entering into contracts, making certain payments, appointing or hiring new persons. The DSABs will be permitted to engage in such activities, however if they first obtain approval from the Minister or it is done in accordance with the board’s estimates of its revenues and expenditures prepared under subsection 231 (1) of the Education Act for the 2008-2009 school year, as reviewed by the Minister. See Appendix A for s. 13.5(1) in its entirety.

These restrictions are extensive and it is important to note that a  DSAB that engages in any of the enumerated activities may create significant legal problems not only for itself, but for its successor board.

2. Integration of non-unionized DSAB employees

The legislation affecting the merger is largely silent with regard integrating non-unionized DSAB employees into the DSBs. Regulation 486/01 (the Regulation which affects the merger) says that the Boards will “merge” and that the DSABs’ employees’ contracts of employment, along with all of the rights, benefits and obligations thereunder will be assumed and continued by the DSBs. Apart from these provisions, the legislation does not disclose how a DSB may appropriately deal with the transferred employees and union bargaining agents.

With the absence of statutory guidance under the Education Act and its Regulations, the issues surrounding the integration of non-unionized DSAB employees will be dealt with via provincial employment legislation (the Employment Standards Act and its Regulations),  the common law, and in compliance with the terms of the DSABs’ employment contracts (written or oral).

Some issues that we anticipate the DSBs will face in relation to the integration of non-unionized employees include:

• relocation of employees
• parity of wages/salaries between existing and incoming employees
• potential terminations of employment of incoming DSAB employees and notice periods
• severance if termination is necessary
• potential Employment Insurance issues
• vacation pay

Summary

On September 1, 2009 all of the non-unionized employees employed by the DSABs before June 1, 2009 will become employees of the Successor Boards, and all of the DSAB non-unionized employees will continue to have the same rights.

3. Integration of former DSAB unionized employees

The Ontario Labour Relations Act (“OLRA”) and the Education Act set-out provisions which govern the treatment of collective bargaining units, agents and agreements when two or more educational entities merge in Ontario.

The Education Act and OLRA apply to Teachers, their unions and their collective agreements. The OLRA applies to all non-Teacher collective bargaining units, their unions and their collective agreements.

The ORLA

In the event of a merger, the OLRA and Regulation 309/09 of the Education Act preserves the existing unions rights. A union which has been certified or has given or is entitled to give notice to bargain continues to be the bargaining agent for the employees of DSABs. Furthermore, the DSB occupies the same position as DSAB with respect to any collective agreement in effect or any certification or termination application pending before the Board.

However, the merger of School Boards may give rise to a number of issues affecting a union’s bargaining rights, as where

• two different unions representing employees performing similar work;

• a claim is made that a conflict exists between the bargaining rights of the union which represented the employees of the DSAB and the union which represents the employees of the DSB, and whether one union should represent all workers;

• should non-union employees be part of existing collective agreements?

Teachers

The effect of the merger on Teachers’ unions will be similar to that of their non-teacher unionized counterparts. An important difference to note is that unlike their non-teacher counterparts, the Education Act establishes teacher bargaining units for both district school boards as well as school authorities. Likewise, the Education Act specifically matches the statutory bargaining units with unions, i.e. ETFO and all elementary school teachers at a Board. As such, when the Boards merge, there will be no issue as to what constitutes a teachers like bargaining unit, as the bargaining units will be provided for by statute (the Education Act). How and when differing collective agreements for the same teacher group will be merged will require additional DSB labour relations work.

Summary

The effects of the merger on unions are far too substantial and context specific to go into in any greater detail in the report. The important thing to note is that the merger will effect both Teachers’ unions and non-teachers unions in similar and different ways, and moreover, both can be affected substantially.

4. Treatment of former DSAB Trustees

Section 13.6.3(1) of Regulation 309/09 has the effect of removing the current Isolate Board Trustees from their positions as Trustees and replacing them with DSB Trustees. Section 13.6.3(1) outlines which DSB Trustees will be taking over from the former DSAB Trustees.

However, under s. 13.6.3(2) of Regulation 309/09, the former DSAB Trustees will have a right to be “notified of and consulted on any matter considered by the members of its successor board that would have been within the jurisdiction of the isolate board before its merger with the successor board” until November 30, 2010. Furthermore, the former Isolate Trustees will continue to receive their honoraria until November 30, 2010, but they will not be receiving an expense allowance after September 1, 2009.

5. Allocation and distribution of DSAB assets, and liabilities

Section 13.6.1(1) of Regulation 309/09 deals with the distribution of the former Isolate Boards’ assets. Under s. 13.6.1(1), with the exception of four Isolate Boards, all assets and liabilities of the former Isolate Boards will be transferred to the Successor Boards from the Isolate Board.

The Isolate Boards subject to the exception are as follows:

• Hornepayne Roman Catholic Separate School Board,
• Moosonee Roman Catholic Separate School Board,
• Northern District School Area Board
• Red Lake Area Combined Roman Catholic Separate School Board.

(a) Splitting of Hornepayne RCSSB, Moosonee RCSSB, and the Red Lake RCSSB

Under the Regulation 309/09 Hornepayne RCSSB, Moosonee RCSSB, and the Red Lake RCSSB will be merging with one English School Board and one French School Board. You will note that the government has chosen to name one of the succeeding boards a “Receiving Board”. It appears that a Receiving Board is functionally identical to a Successor Board. The mergers will be as follows:

• Hornepayne RCSSB merging with the Northeastern Catholic DSB (English), and the CSD des Grandes Rivières (French);

• Moosonee RCSSB merging with the Northeastern Catholic DSB (English), and CSD des Grandes Rivières (French); and

• Red Lake RCSSB merging with the Kenora Catholic DSB (English), and CSDC des Aurores boréales (French).

(b) Splitting of Northern District School Area Board;

On September 1, 2009 the Northern District School Area Board (“NDSAB”) will merge into one Successor Board and One Receiving Board; namely, the Lakehead District School Board and the Keewatin-Patricia District School Board. Education Act, Regulation 295, which sets out the rules pertaining to the composition of the NDSAB will be revoked September 1st, 2009.

(c) Distribution of Hornepayne RCSSB, Moosonee RCSSB, Red Lake RCSSB and Northern District School Area Board assets and liabilities

The distribution of the Hornepayne Roman Catholic Separate School Board’s, the Moosonee Roman Catholic Separate School Board’s, the Northern District School Area Board’s and the Red Lake Area Combined Roman Catholic Separate School Board’s assets are outlined under s. 13.6.1 (1) paragraphs 1 through 5. A copy of these provisions is attached as Appendix B.

6. Treatment of the Northern School Resource Alliance

The Ontario government has added a specific provision under Regulation 309/09 dealing with the treatment of the Northern School Resource Alliance (“NSRA”). Under s. 13.6.1(2) and (3) the government has appeared to transfer at least financial management of the NSRA to the Lakehead District School Board (“LDSB”). We say “appeared” to have transferred because the provisions do not explicitly transfer management and control to the LDSB. Instead, the legislation provides that on September 1, 2009 the “financial obligations” of the NSRA members will be transferred to the LDSB to be held in trust on behalf of such members. The LDSB is to ensure that the NSRA provides the services it has contracted to provide the NSRA members until those services are no longer needed. After the NSRA has provided those services, the LDSB is to wind-up the NSRA. Interestingly, other bodies such as the AFGM (Asquith-Garvey, Foleyet, Gogama, Missarenda) School Boards Co-Operative Services Program and NEOSA (North Eastern Ontario School Authorities) are not dealt with by the new Regulations, even though similar issues may require similar treatment.

7. Funding for DSBs going forward

The legislation responsible for effecting the merger is silent on the issue of funding, going forward. Rather, it appears that the method the provincial government will adopt to address the mergers will be through amendments to the Grants for Students program and EPO grants.

The Supported Schools Program is very likely to continue. The money disbursed under this program, though transferred to the Successor Boards, will be earmarked for the specific DSAB schools going forward. Finally, there also does not appear to be amendments to the Territorial Student Program which operates for certain areas located in Northwestern Ontario.

SUMMARY

In its effort to provide DSAB students and teachers with better resources and supports the McGuinty government will merge all DSABs with the DSBs on September 1, 2009. Despite the relative simplicity of the legislation drafted to effect the change, the implications of the upcoming merger will be far reaching, and will undoubtedly raise significant work loads as DSBs attempt to provide and be seen to provide the services and representation the Isolate Boards have provided locally in the past. Start your engines….

No information contained here or on our web site should be expected to take the place of professional legal advice.  Laws and government policies are subject to frequent change. Accordingly, the firm of Cheadles LLP cannot assume any responsibility for actions taken solely or principally on the basis of the information contained herein.

Responsible Communication and Defamation

Responsible communication on matters of public interest:

An analysis of the modification to qualified privilege

In 2009, the Supreme Court of Canada modified the law of defamation by  creating the defence of responsible communication on matters of public  interest. The foundation for this new defence emerged from the renowned  decision by the House of Lords in Reynolds v Times Newspapers Ltd. In  effect, the defence offers significantly more protection to journalists than  qualified privilege. This article will analyse the development and  establishment of the responsible communication defence in Canada and  then attempt to determine if this new defence could be applied in Australia.  The author is of the view that Australian media would benefit from a new  protection from defamation suits, thereby giving greater strength to the  public exchange of information that is vital to the health of Australian society.

Introduction

In 1817, Lord Ellenborough of the King’s Bench heard the matter of Brown v Croome. At issue was an advertisement in a Gloucestershire newspaper that called into question the character of Brown, making reference to the circumstances of his bankruptcy. Croome argued the advertisement was a privileged communication as it was his duty to inform the public about Brown’s dealings. Lord Ellenborough disagreed, ruling that ‘every unauthorized publication to the detriment of another, was in point of law, to be considered as malicious’.

This statement provides an interesting perspective on how much the law of defamation has changed over the past 200 years of jurisprudence. Had the ruling of Lord Ellenborough stood the test of time, modern journalism as we know it would simply not exist. Later in the 19th century, Cockburn CJ of the King’s Bench brought the law of defamation in the opposite direction from Lord Ellenborough, ruling that ‘a man has a right to publish, for the purpose of giving the public information, that which it is proper for the public to know’.

The challenge contemporary Australian courts face is balancing the right to information with an individual’s right to protect their reputation. Living at the core of this balance is defamation law.

The common law’s approach to defamation is constantly in flux, with some jurisdictions tending to favour those who publish information, while others favour the protection of reputation. In Australia, the courts have recognised the necessity to freely exchange ideas without the threat of liability in defamation in special situations. For example, parliamentary or court proceedings that happen to contain a defamatory statement will normally attract the defence of absolute privilege, regardless of their ‘truth or falsity or the motive which inspired the making of them’. However, journalists will not qualify for this defence unless they are personally appearing as a witness in court or before a parliamentary body. In situations that involve media coverage of a defamatory statement in these types of proceedings, journalists and publishers may raise a defence of qualified privilege. To rely on this defence, the defendant must show there was a duty to provide certain information, the public had an interest in receiving it, and that the defendant was not acting maliciously when publishing the information.

At common law, qualified privilege was generally not available ‘where the information has been disseminated to the public generally’. The High Court of Australia attempted to extend the defence in Lange v Australian Broadcasting Corporation, implying a constitutional protection for publications related to government and politics. However, qualified privilege under Lange has been criticised as offering little protection to publishers due to the narrow circumstances where it can be applied. Nevertheless, as it stands at common law in Australia, when a defamatory matter is communicated to the public at large, a defendant may rely on qualified privilege so long as the matter was a political communication and the defendant’s conduct was reasonable, not actuated by malice.

In statute, Australia has adopted uniform defamation legislation in each of the states and territories, collectively referred to as the National Uniform Defamation Legislation (‘NUDL’). Prior to the introduction of the NUDL, defamation law in Australia was subject to eight different regimes spread across eight different jurisdictions. This was obviously very problematic, confusing, and expensive to litigate, especially in an age of national media. In terms of its effect on qualified privilege, the NUDL expanded the defence so that it applies to all matters of public interest, so long as the publisher acted reasonably in the circumstances.

Two years after Lange but before the introduction of the NUDL, the House of Lords delivered its well-documented and widely renowned judgment in Reynolds v Times Newspapers Ltd. The facts of Reynolds surround an article published in a British national newspaper about the November 1994 resignation of Albert Reynolds, then prime minister of Ireland. It was alleged that Reynolds had deliberately and dishonestly misled the Irish Parliament and his coalition cabinet by suppressing vital information. The Reynolds decision effectively expanded qualified privilege to circumstances where publishers communicate to the world at large defamatory material on matters of public concern, so long as they acted responsibly. The notion of responsible journalism on a matter of public interest became known as the ‘Reynolds privilege’ and was quickly recognised as a media-friendly development. However, for reasons to be discussed later, the Reynolds privilege proved difficult to apply.

In Canada, courts were departing from an earlier conservative stance that preferred reputation above freedom of expression by slowly easing the strictures of qualified privilege. The uncertainty surrounding qualified privilege in Canada, along with its inconsistencies with the Charter of Rights and Freedoms, effectively forced the hand of the Supreme Court of Canada to modify the law. In her lead judgment in Grant v Torstar, McLachlin CJ said:

The traditional common law defence of qualified privilege, which offered no  protection in respect of publications to the world at large, situates itself at one end  of the spectrum of possible alternatives. At the other end is the American approach  of protecting all statements about public figures, unless the plaintiff can show  malice. Between these two extremes lies the option of a defence that would allow  publishers to escape liability if they can establish that they acted responsibly in  attempting to verify the information on a matter of public interest.

The Supreme Court of Canada went on to create the defence of responsible communication on matters of public interest, leaving the traditional defence of qualified privilege intact. As one Canadian academic put it, the defence grants journalists reporting on issues of public importance ‘the right to be wrong . . . not completely wrong, of course, but the defence will defeat a libel claim if, despite the journalist’s best efforts, some facts or allegations turn out to be wrong or false’. As will be discussed throughout, the new defence is very media-friendly when compared to qualified privilege. This research will analyse the development and formulation of the responsible communication defence, and attempt to determine what, if any, application it may have on the defamation landscape in Australia.

A brief discussion on qualified privilege in Australia

Qualified privilege as a defence to defamation in Australia exists in two branches: at common law and under s 30 of the NUDL. In general, qualified privilege at common law does not provide much protection to the media.

The problem publishers face when trying to raise a qualified privilege defence is that it is very narrow in scope, often applied rigidly by the courts. At common law, a defamatory publication does not attract qualified privilege merely because it deals with a matter of public interest.

However, in 1994 the High Court delivered landmark decisions in Theophanous v Herald & Weekly Times Ltd and Stephens v West Australian Newspapers Ltd. These decisions implied into the Australian Constitution a freedom of speech concerning political and governmental affairs, expanding qualified privilege to cover media publications about political matters. The High Court was somewhat divided over the implied constitutional protections, specifically in Theophanous. Several years later, a unanimous High Court clarified the law, confirming in Lange that the common law defence of qualified privilege extends to the media in matters related to political communication.

The facts of Lange concern a current affairs television program that criticised the conduct of New Zealand’s then Prime Minister, David Lange. Lange said the program conveyed to the public at large that he was unfit to hold public office. The High Court held that ‘each member of the Australian community has an interest in disseminating and receiving information, opinions and arguments concerning government and political matters that affect the people of Australia’.

While Lange solidified the extension of qualified privilege in Australia, it also weakened it. Under Theophanous, privilege could only be defeated by malice, but under Lange, all political publications face the reasonableness test. To establish reasonableness, the court said the defendant must show:

• there were reasonable grounds for believing the imputation was true;

• proper steps were taken, so far as they were reasonably open, to verify the accuracy of the material;

• the imputation was not believed to be untrue; and

• a response was sought from the person defamed and it was published, except in cases where a response was not practicable or it was unnecessary.

The requirement of reasonableness has been a demanding standard for media defendants to meet in practice. While Lange resembles Reynolds in its focus on reasonableness, Reynolds appears to be far more beneficial to journalists as it applies to matters beyond political communication and the reasonableness test is not applied as stringently. Nevertheless, the courts have made it very clear that Reynolds is not part of Australian law.

The key consideration for qualified privilege at common law is the occasion in which the defamatory statement was made. As a general rule, the common law protects the publication of defamatory matter made on an occasion where one person has a duty or interest to make the publication and the recipient has a corresponding duty or interest to receive it. According to Simpson J of the NSW Supreme Court, the determination of a defence of qualified privilege at common law involves three strands of inquiry:

• dentification of an occasion of qualified privilege by reference to all of the circumstances in which the communication is published, including, particularly, the subject matter of the communication. This involves the identification of a duty or interest in the publisher to communicate with respect to that subject matter, and a reciprocal interest in the recipient in receiving a communication with respect to that subject matter;

• determination whether the content of the communication was relevant, germane, or sufficiently connected to that occasion or subject matter; and

• (only if both occasion and relevance are established) determination whether, notwithstanding that occasion and relevance are established, the occasion was misused, or used for an ulterior or extraneous purpose, such as to give rise to a finding that the publisher was actuated by express malice.

In 2010, the High Court considered the occasion as it relates to qualified privilege in the matter of Atkas v Westpac Banking Corporation. In that case, Westpac mistakenly dishonoured a number of cheques drawn by the applicant’s real estate company. The cheques were returned to the payees stamped ‘Refer to Drawer’. Because this expression was widely understood to mean that there were insufficient funds to meet the cheque, the applicant sued the Westpac for defamation. Westpac brought a defence of qualified privilege, claiming the payees had sufficient interest in receiving the communication that the cheques were dishonoured, despite the fact that the dishonour was based on an erroneous understanding on the part of Westpac. The court was divided on whether the occasion gave rise to qualified privilege.Amajority of 3:2 held that the occasion did not allow for the defence — while Westpac had an interest in communicating that it refused to pay, the payee did not have an interest in receiving the communication, mainly because it was erroneous to being with. Heydon and Kiefel JJ discussed the danger of focusing on the contents of the defamatory statement itself, as opposed to the broader occasion as a whole. In dissent, their Honours noted that the fact the communication was a mistake was irrelevant. The important consideration is that where a cheque is being dishonoured, a bank has a duty to communicate the matter to the payee, and the payee has an interest in receiving the information.

The High Court’s decision in Aktas emphasises the need to focus on the duty/interest of the occasion in which the defamatory statement is made. However, the result of Atkas appears to limit qualified privilege as only being available where the publisher has not made any error.

Statutory qualified privilege

The NUDL deals with the defence of qualified privilege under s 30. For the defence to be available, the defendant must prove:

• the recipient has an interest or apparent interest in having information on some subject;

• the matter is published to the recipient in the course of giving to the recipient information on that subject; and

• the conduct of the defendant in publishing that matter is reasonable in the circumstances.

Clearly, statutory qualified privilege is broader than the common law version, offering a defence to the media publishing on important public matters, even when they cannot prove the truth of the defamatory allegations they are publishing. However, just as with the common law approach, courts have interpreted the words ‘reasonable in the circumstances’ narrowly.

In order to determine if publishing the defamatory matter is reasonable, the NUDL provides a list of considerations the court may take into account. They are:

• the extent to which the matter published is of public interest;

• the extent to which the matter published relates to the performance of the public functions or activities of the person;

• the seriousness of any defamatory imputation carried by the matter published;

• the extent to which the matter published distinguishes between suspicions, allegations and proven facts;

• whether it was in the public interest in the circumstances for the matter published to be published expeditiously;

• the nature of the business environment in which the defendant operates;

• the sources of the information in the matter published and the integrity of those sources;

• whether the matter published contained the substance of the person’s side of the story and, if not, whether a reasonable attempt was made by the defendant to obtain and publish a response from the person;

• any other steps taken to verify the information in the matter published; and

• any other circumstances that the court considers relevant.

These factors are a combination of those found under s 22 of the Defamation Act 1974 (NSW) and the Reynolds factors. Interestingly, s 30 of the NUDL does not expressly include two of the key provisions from the reasonableness test prescribed by the High Court in Lange: the publisher does not need to show reasonable grounds for believing the imputation was true, nor is it required that the publisher not believe the imputation to be untrue. This is an important distinction as it reflects a changing attitude towards malice.

Under statutory qualified privilege or at common law, even where the requirements of qualified privilege have been met, the defence can be defeated if the plaintiff proves that the defamatory matter was actuated by malice. While malice can be proven in a variety of ways, in Roberts v Bass, Gaudron, Gummow and McHugh JJ held that if the defendant knew that the defamatory matter was false or was made recklessly to the point of wilful blindness, it will constitute almost conclusive proof that its making was actuated by malice. Their Honours went on to say that a lack of belief in the truth of the defamatory material will not be sufficient by itself to prove malice.

Overall, because the standard of reasonableness is lower and because it applies to all matters of public interest, rather than specifically those related to political matters, s 30 of the NUDL has a wider application for qualified privilege than the common law under Lange. As a result, it is a more favourable defence to the media.

Development of the responsible communication defence

The origin of the responsible communication defence emerges from Reynolds. Before the matter was heard by the House of Lords, the Court of Appeal dismissed the appeal from the defendants, affirming that Times Newspapers was not entitled to a defence of qualified privilege in the proceedings, formulating this decision based on the ‘circumstantial test’.

The circumstantial test from the Court of Appeal ‘broke new ground’ as an additional test which had to be satisfied in relation to any occasion where qualified privilege is sought. However, the test was criticised by the House of Lords as giving rise to ‘conceptual and practical’ difficulties. The Times argument that the common law should develop political information as a generic category whose publication automatically attracts qualified privilege regardless of the circumstances was also rejected. In the words of Lord Nicholls, such a development would not provide adequate protection for reputation. Instead of introducing a circumstantial test or new generic category, the court stretched the common law approach to qualified privilege, allowing the court to analyse the factors behind the publication, in conjunction with the traditional duty-interest test, to determine if the publication was in the public interest.

Lord Nicholls listed the matters that can be taken into account in the circumstantial test. They are:

(a) the seriousness of the allegation.

(b) the nature of the information, and the extent to which the subject matter is a matter of public concern.

(c) the source of the information.

(d) the steps taken to verify the information.

(e) the status of the information.

(f) the urgency of the matter.

(g) whether comment was sought from the plaintiff.

(h) whether the article contained the gist of the plaintiff’s side of the story.

(i) the tone of the article.

(j) the circumstances of the publication, including the timing.

The factors outlined by Lord Nicholls were meant to be illustrative only, serving as a guideline to judges to determine if the publication was subject to qualified privilege. However, some legal commentators noted that the Reynolds defence was of little value to publishers because the 10 factors were being treated as hurdles to be surmounted. After several years of uncertainty about the application and scope of the decision, the House of Lords clarified the Reynolds defence in Jameel v Wall Street Journal, saying that the list of factors was not meant to be ‘a series of hurdles to be negotiated by a publisher before he could successfully rely on qualified privilege’.

The facts of Jameel involved an article published in the European edition of the Wall Street Journal with the heading: ‘Saudi Officials Monitor Certain Bank Accounts’. The article alleged that the Saudi Arabian Monetary Authority (the Kingdom’s central bank) was, at the request of United States law enforcement agencies, monitoring bank accounts associated with some of the country’s most prominent businessmen in a bid to prevent them from being used for funnelling funds to terrorist organisations. The article named a number of companies and individuals including the respondents, Mohammed Abdul Latif Jameel and his company Abdul Latif Jameel Co Ltd.

The Wall Street Journal relied on the Reynolds defence. This claim was rejected by the trial judge and the Court of Appeal, on the grounds that the Jameels were not given sufficient time to comment on the proposed publication and that ‘there was no compelling reason why Mr Jameel could not have been afforded 24 hours to comment on the article’. This was seen by the House of Lords as a very rigid application of the Reynolds factors, especially considering the information published in the article was confirmed by several sources, including a United States embassy official and a senior Saudi official. In applying a previous statement by Lord Nicholls, Lord Hoffman said the standard of conduct required of the newspaper must be applied in a practical and flexible manner, having regard to practical realities, giving deference to the editorial judgment of editors and journalists.

By this time, Australian courts had extended qualified privilege to encompass information that was published when it was reasonable in the circumstances. English courts, on the other hand, were laying the foundations for a defence based on ‘responsible journalism’. As Lord Nicholls said in Bonnick v Morris:

Stated shortly, the Reynolds privilege is concerned to provide a proper degree of  protection for responsible journalism when reporting matters of public concern.  Responsible journalism is the point at which a fair balance is held between freedom  of expression on matters of public concern and the reputations of individuals.  Maintenance of this standard is in the public interest and in the interests of those  whose reputations are involved. It can be regarded as the price journalists pay in  return for the privilege.

Cusson v Quan — Ontario Court of Appeal

Before the Supreme Court created the defence of responsible communication on matters of public interest in 2009, the Ontario Court of Appeal created the responsible journalism defence in 2007. The responsible journalism defence materialised from the case of Cusson v Quan. It was modelled off the approach of the English courts, except it was a new defence altogether, not just an extension of qualified privilege.

The facts of Quan surround a series of articles published in the Ottawa Citizen about Danno Cusson, a constable with the Ontario Provincial Police. Shortly after the attacks on 11 September 2001, Cusson travelled to New York without the permission of his employer to assist with the search and rescue efforts at Ground Zero. According to one article, Cusson had presented himself to the New York State Police as a Canadian federal police officer trained in K-9 rescues which, according to several sources, was false. Initially, Cusson was portrayed in the media as a hero. However, in one of several follow-up articles, Cusson was accused of misrepresenting himself and hampering early rescue efforts. Cusson brought a libel action against the newspaper, the reporters, and OPP Staff Sargeant Penny Barager, who was quoted in several of the articles.

At trial, the defendants sought to rely on qualified privilege, arguing Cusson’s activities in New York were a matter of public interest, and that the media had a duty to publish the information while the public had a reciprocal interest in receiving it. The trial judge rejected this argument, saying ‘there was not a compelling, moral or social duty to publish’ the information. However, the trial judge did say that qualified privilege applied in relation to an article about Cusson’s disciplinary proceedings, as this constituted a court proceeding. The jury went on to award Cusson $100 000 in general damages against the Ottawa Citizen and $25 000 against Penny Barager, on the basis that several imputations could not be proven, including that the plaintiff may have compromised theWorld Trade Centre rescue effort and had no search and rescue training.

The defendants appealed the decision to the Ontario Court of Appeal. The court unanimously dismissed the appeal, despite adopting the reasoning in Reynolds. Writing for the court, Sharpe JA noted that Jameel was not decided until after the original trial, and therefore, the appellants did not have an opportunity to advance the reasoning of a similar defence at the trial level. Ultimately, the court held that it would be unfair to the plaintiff and wrong for the court to order a new trial to permit the appellant to litigate the question of responsible journalism. Nevertheless, the Court of Appeal undertook an extensive review of the Canadian law of qualified privilege, factoring in the recent developments in other common law jurisdictions.

Prior to the Quan decision, qualified privilege in Canada was in a state of flux. In a series of decisions throughout the 1950s and 1960s, the Supreme Court of Canada took a very narrow position, especially when it came to publications in newspapers. For example, in Douglas v Tucker, Saskatoon’s Star-Phoenix published excerpts from a speech made by the Premier of Saskatchewan containing allegations that the leader of the opposition party faced charges of fraud. The plaintiff had in fact been sued for fraud, but at the time of publication, a motion to strike the pleading had been adjourned to allow for the filing of responding material. At trial, the defendant was allowed to rely on qualified privilege. However, this decision was overturned by the Saskatchewan Court of Appeal. The Supreme Court upheld the Court of Appeal’s ruling. Cartwright J, writing for the Supreme Court, bluntly said, ‘such a privilege is lost if the publication is made in a newspaper’.

In Jones v Bennett, the plaintiff was a public servant who was charged by the Attorney-General of British Columbia for unlawfully accepting benefits. On the same day he was charged, an Order in Council was passed that relieved the plaintiff from his duties. The charges against the plaintiff were eventually dismissed, and as a result, he refused to vacate his office. This led the government to introduce a peculiar bill in the provincial legislature: ‘An Act to Provide for the Retirement of George Ernest Pascoe Jones’. The defendant was, at the time, the Premier of British Columbia. During a speech that the defendant delivered at a meeting of supporters of his political party, he used the following words: ‘I’m not going to talk about the Jones boy. I could say a lot, but let me just assure you of this; the position taken by the government is the right position’. The plaintiff then brought an action for slander. The defendant attempted to rely on qualified privilege but the defence failed. The Supreme Court unanimously concluded that the Premier must have known that whatever he said would be communicated to the general public because two reporters sat at a press table in full view of the speaker’s table. In following the decision from Tucker, the Supreme Court once again affirmed that where the words complained of are published to the world, then qualified privilege is not an available defence. Interestingly, the court said in obiter that had the defendant made his comments with no reporters present, then he would have been able to successfully rely on qualified privilege. It is also worth noting that, as with the Tucker decision, the judgment of the court was given by Cartwright J.

This line of decisions remained intact for a decade, maintaining the landscape of qualified privilege as a defence that does not apply to communications made to the world at large. The rigid protection of reputation over free expression did not start to ease until the late-1970s when the Ontario Court of Appeal decided, in stark contrast to Jones v Bennett, that the media could be protected by qualified privilege. In reversing the trial judgment that qualified privilege could not be made out, Jessup JA said in Stopforth v Goyer:

In my opinion the electorate, as represented by the media, has a real and bona fide  interest in the demotion of a senior civil servant for an alleged dereliction of duty   [. . .] The appellant had a corresponding public duty and interest in satisfying that  interest of the electorate.

Developing the ‘responsible journalism’ defence

Canadian case law began evolving qualified privilege in favour of publishers. More and more courts were beginning to apply the principle that qualified privilege could be established if there was a public interest in publishing the defamatory material to the public at large.

However, this line of reasoning was complicated by the Supreme Court’s decision in Hill v Church of Scientology. The facts of Hill involve defamatory statements at a Church of Scientology press conference about unfounded contempt of court allegations against a Crown attorney, Casey Hill. At trial, a jury found in favour of Hill and awarded $1.6 million in damages. Subsequent appeals by the defendant were dismissed by both the Ontario Court of Appeal and the Supreme Court. What emerged from Hill is the principle that in the context of civil litigation, the Charter of Rights and Freedoms will apply to the common law to the extent that the common law is found to be inconsistent with Charter values. In the case of qualified privilege, the court discussed the competing balance between the freedom of expression and the protection of reputation. While the freedom of expression is found within the Charter, the protection of reputation is not. However, Cory J, writing for the majority, said, ‘the good reputation of the individual represents and reflects the innate dignity of the individual, a concept which underlies all the Charter rights’. Ultimately, the court sided with the protection of reputation, saying defamatory statements are very tenuously related to the core values which underlie the freedom of expression provision of the Charter.

Ultimately, after thoroughly reviewing Canadian case law, factoring in certain Charter values, and carefully considering recent changes throughout the common law world, the Ontario Court of Appeal in Quan concluded that the traditional common law standard for qualified privilege unduly burdens freedom of expression. A more appropriate balance between protecting reputation on the one hand and the public’s right to know on the other was needed. The court decided the most appropriate way to reconcile the varying authorities on the issue was to adopt a public interest defence for responsible journalism.

In adopting the defence, Sharpe JA noted that earlier Supreme Court decisions must be respected, namely the principle that ‘individual reputation should not be unduly sacrificed or compromised’. However, Sharpe JA also said the earlier, more restrictive Supreme Court decisions did not preclude the Court of Appeal from adopting the Reynolds/Jameel defence, namely, because it is a ‘different jurisprudential creature’.

In formulating the new defence, the categorical approach of Australia was expressly rejected, specifically the limitation to political communication. The court said such an approach would introduce a potentially troublesome distinction between various types of expression, unnecessarily complicating the law, and all the while violating the Charter’s broad protection of all forms of expression. The adoption of the new defence was expressed in the following words:

We should not, as the House of Lords cautioned, adopt the Reynolds-Jameel defence  in a slavish or literal fashion, but rather accept it in a manner that best reflects  Canada’s legal values and culture. The defence rests upon the broad principle that  where a media defendant can show that it acted in accordance with the standards of  responsible journalism in publishing a story that the public was entitled to hear, it  has a defence even if it got some of its facts wrong. That standard of responsible  journalism is objective and legal, to be determined by the court with reference to the  broader public interest. The non-exhaustive list of ten factors from Reynolds, applied  in the manner directed in Jameel, provides a useful guide.

With this decision, the path was now paved for the Supreme Court to weigh in on the adoption of the responsible journalism defence for courts across Canada.

Grant v Torstar — Supreme Court of Canada

In December 2009, the Supreme Court delivered concurrent decisions in Grant v Torstar and Quan v Cusson. Both decisions involved the applicability of the responsible journalism defence, as introduced by the Ontario Court of Appeal. The Supreme Court analysed the defence at length in Grant, whereas its decision in Quan mainly applies the reasoning set forth in Grant. For this reason, special focus will be given to the Grant decision.

The facts of Grant involve statements made in the Toronto Star about businessman Peter Grant. In the late 1990s, Grant wanted to build a nine-hole golf course on a lakefront estate in Northern Ontario where his home and company’s executive offices were located. In order to build the course, he needed to purchase adjacent Crown land and get government approval from various levels. Local residents opposed the project over environmental concerns. At a public meeting about the project, local residents expressed their concern about the transparency of the process, pointing to the fact that Grant was a long-time supporter and financial contributor of the Ontario Progressive Conservative Party (the party in power at the time), as well as a personal friend of then Premier of Ontario, Mike Harris. One of the people at the meeting sent Star reporter Bill Schiller an email describing the sentiment of local cottagers. Schiller investigated the matter further, examining documents relating to the project, elections records about Grant’s connection to the Progressive Conservative party, and speaking to local residents. On several occasions, Schiller attempted to interview Grant about the issue, but his requests were denied. On 23 June 2001, the Toronto Star published Schiller’s article, headlined: ‘Cottagers teed off over golf course — Long-time Harris backer awaits nod on plan’. Included in the article was a statement by one of the cottagers, Lorrie Clark, who said, ‘everyone thinks it’s a done deal because of Grant’s influence — but most of all his Mike Harris ties’. Grant and his company, Grant Forest Products, sued Schiller, the Star and Clark.

At trial, the plaintiffs argued the article accused Grant of improperly using his influence to obtain government favours. The defendants, relying on Reynolds, argued qualified privilege should apply based on the concept of public interest responsible journalism. The trial judge said the defence would not apply in the circumstances because the story had a ‘very negative tone’, and the jury subsequently awarded the plaintiffs aggravated and punitive damages totalling nearly $1.5 million.

With the Ontario Court of Appeal’s judgment in Quan recognising a new defence of responsible journalism, the defendants appealed the jury verdict. Writing for the court, Feldman JA affirmed the new defence in Quan and held that this defence should have been left to the jury. Her Honour noted that the trial judge applied an excessively narrow conception of the public interest and that as a matter of law, the story was in the public interest. On the issue of responsibility relating to the new defence, Her Honour also noted that the trial judge should have given more weight to the reporter’s attempts to verify the allegations. Particular regard was had to the extensive research conducted by Schiller, and to the fact that he attempted on several occasions to interview Grant. Concluding the jury instructions were incorrect, the Court of Appeal allowed the appeal, set aside the verdict, and ordered a new trial.

Grant appealed the matter to the Supreme Court, asking for the jury verdict to be reinstated. The defendants cross-appealed, asking the court to apply the new defence and dismiss the action. The court took the opportunity to analyse the current law in Canada with respect to qualified privilege, and to consider whether the protection given to factual statements published in the public interest should be strengthened. After considering the evolution of qualified privilege, looking at the same chronology as did the Ontario Court of Appeal in Quan, the Supreme Court recognised that the threshold for qualified privilege remains high and the criteria required to establish it is unclear. As a result, the court decided to broaden the available defamation defences to public communicators reporting matters of fact. The decision was based on two notions: (1) that existing law was inconsistent with the principle of freedom of expression in the Charter, and (2) recent changes in other common law jurisdictions have afforded more protection to the press and Canada needed to follow suit.

Freedom of expression in the Charter

With regard to the first notion, McLachlin CJ (writing for the majority) focused on Canadian constitutional values, stating that ‘freedom of expression and respect for vigorous debate on matters of public interest have long been seen as fundamental to Canadian democracy’. In 1982, Canada enacted the Charter of Rights and Freedoms which, among other things, confirmed constitutional protection for free expression: ‘Everyone has . . . freedom of thought, belief, opinion and expression, including freedom of the press and other media of communication’. Despite the Supreme Court recognising that an individual’s reputation is also protected by the Charter, the majority in Grant said that it is the duty of the court to take ‘a fresh look at the common law from time to time, and re-evaluate its consistency with evolving societal expectations through the lens of Charter values’. It can be inferred from this statement that the Supreme Court believed that there had been a shift in the values of Canadian society in the decade and a half since Hill, where the public placed a stronger value on the importance of free expression over the protection of reputation. However, McLachlin CJ expressly stated that Charter principles ‘do not provide a licence to damage another person’s reputation simply to fulfil one’s atavistic desire to express oneself’.

Approach of other jurisdictions

With regard to the second notion, the Supreme Court followed the path laid out by the Ontario Court of Appeal in Quan, recognising that other common law countries have developed rules that give greater scope to freedom of expression.

The court began its analysis of other jurisdictions by rejecting the approach of the United States Supreme Court in Sullivan. Briefly, the principle that emerged from Sullivan is that the First Amendment’s free speech guarantee means that an individual cannot recover in defamation unless they can prove ‘actual malice’. While this ratio applies to public officials, the Supreme Court of Canada noted that this approach has made it extremely difficult for a plaintiff to sue successfully for defamation. This approach clearly conflicted with the court’s desire to develop a law that continued to protect reputation.

After a short look at the United States’ position, the court considered the United Kingdom’s approach, with particular attention given to the Reynolds and Jameel decisions. This was followed by a brief look at Australia’s position under Lange, New Zealand’s position under Lange No 3, and South Africa’s position under Bogoshi. The conclusion of this analysis was that other common law jurisdictions, when faced with balancing free expression and the protection of reputation, are allowing publishers to escape liability if they can establish that they acted responsibly. The Supreme Court clearly agreed with this position.

Following the analysis of Charter values and the approach of other common law jurisdictions, the Supreme Court ventured to formulate the new defence. The first issue was whether it would be a new defence outright or an extension of qualified privilege. While the House of Lords intended Reynolds to be an extension of qualified privilege, the Supreme Court said the decision effectively created a new defence. With the introduction of the Reynolds factors, the conduct of the defendant was the dominant focus of the inquiry, whereas with qualified privilege, the dominant focus was the circumstances of the communication. This shift in focus meant that the Reynolds privilege is a ‘different jurisprudential creature from the traditional form of privilege from which it sprang’. Ultimately, it is not the occasion that is protected by the new defence, but the published material itself. The Supreme Court also thought it was necessary to separate the duties and interests of people who traditionally fall within the scope of qualified privilege (such as job references or police reports) from media publications. The reason for this distinction is because there is a difference in the reciprocal duty between the two groups. As a result, the court did not want to compromise or obscure the traditional framework of qualified privilege, opting instead to leave it intact.

In terms of naming the defence, the Supreme Court wanted to move away from the term ‘responsible journalism’, as those making public communications about matters of public interest are not necessarily journalists. By formulating the defence to cover bloggers and other online publishers, the defence became ‘available to anyone who publishes material of public interest in any medium’. Therefore, the new defence is referred to as ‘responsible communication on matters of public interest’.

Formulating the defence of responsible communication on matters of public interest

The substance of the new defence revolves around the two essential elements highlighted by Sharpe JA in Quan: public interest and responsibility. As a result, the Supreme Court formulated the test as follows: first, the publication must be on a matter of public interest. Second, the defendant must show that publication was responsible, having regard to the relevant circumstances.

Was the publication on a matter of public interest?

Courts have always struggled with determining what is the public interest as a matter of law. One widely accepted definition comes from Lord Denning:

Whenever a matter is such as to affect people at large, so that they may be  legitimately interested in, or concerned at, what is going on; or what may happen to  them or to others; then it is a matter of public interest on which everyone is entitled  to make fair comment.

Whether a matter is of public interest is for the presiding judge to decide, acting like a gatekeeper. This is analogous to a judge’s role in determining whether an occasion is subject to privilege. In making this determination, the judge is to consider the subject matter of the publication as whole, not scrutinise the defamatory statement in isolation. The Supreme Court specifically noted that public interest is not to be confined, as the public has a genuine stake in knowing about matters ranging from science, to the arts, to the environment, to morality. All that is necessary is that some segment of the public must have an interest in knowing about the matter published.

One issue the Supreme Court recognised with this approach is that it left a significant amount of interpretation open to the presiding judge. As a result, what is in the public interest could be narrowly or broadly construed. The only guidance the Supreme Court offered is that ‘care must be taken’.

As a sub-point to the public interest requirement, a majority of the court held that it is for the jury to decide whether the inclusion of a particular defamatory statement was necessary to communicating the matter of public interest. In Jameel, Lord Hoffman noted that this decision is a question of law for the judge, as did Abella J in her dissent in Grant. However, the majority noted that deciding whether the inclusion of the statement in question was justifiable involves a fact-based assessment, and consequently it is ‘intimately bound up in the overall determination of responsibility’.

Once it is determined by the presiding judge that the publication was a matter of public interest, and the jury decides the defamatory statement was necessary for the communication, the matter proceeds to the second arm of the defence.

Was publication of the defamatory communication responsible?

In order to satisfy the second arm, the Supreme Court made a list of factors to aid in determining whether the defamatory statement was responsibly made. For the most part, the factors closely resemble those set out in Reynolds. There are, however, some differences. Each factor will be briefly discussed below:

The seriousness of the allegation

The court recognised that the defamatory ‘sting’ of a statement has a wide range of implications, from nothing more than an irritant on the one hand, to a devastating blow to an individual’s career and reputation on the other. As a result, publications that include very serious defamatory statements, such as accusations of corruption or criminality, will demand more thorough efforts at verification than will statements of lesser implications. This factor was also included in Reynolds, where it was said that the more serious the charge, the more the public is misinformed and the individual harmed if the allegation is not true.

The public importance of the matter

Despite the first arm of the defence, where a judge determines if a matter is in the public interest, the jury may subsequently assess the degree of importance of the defamatory statement. The court noted that not all matters of public interest are of equal importance, illustrating this point by discussing how grave matters of national security will invoke different concerns from communications about everyday politics. The logic behind this factor is that the higher the public importance, the more likely the publication was responsible in the circumstances. Reynolds listed a similar factor that focused on the extent the subject matter is a matter of public concern.

The urgency of the matter

Considering the urgency of the matter is ultimately a question of timing. Because news is ‘often a perishable commodity’, the timeliness of a publication can be of critical importance. This is especially true when the matter is of significant public importance. The Supreme Court noted that this factor is not meant to unduly hinder the timely reporting of important news, nor is it meant to provide an excuse for irresponsible reporting when a publication is trying to get a ‘scoop’ on a story. As a result, the jury may consider whether the public’s need to know required the defendant to publish when it did. If it is found that a reasonable delay may have assisted the defendant in finding out the truth without compromising the story’s timeliness, this factor will obviously fall in favour of the plaintiff. Reynolds also included this factor.

The status and reliability of the source

This factor coincides with one of the fundamental principles of journalism: always consider the reliability of the source of the information. Here, the court said that the less trustworthy the source, the greater the need to use other sources to verify the allegations. In Reynolds, Lord Nicholls noted while discussing this same factor that some informants have an axe to grind or are being paid for their stories. The Supreme Court made reference to this point, saying that the fact a defendant’s source has an axe to grind does not necessarily deprive them of protection, provided other reasonable steps were taken.

The court also took the opportunity under this factor to discuss confidential sources. Every so often, a journalist must protect the identity of a source. It is often necessary in order to maintain public confidence in the profession as an independent, fourth estate, or avoid any legal or violent retribution. While the court recognised that publishing slurs from unidentified sources could be considered irresponsible, the fact that a publication relied on a confidential source will not necessarily strip them of the defence. It will ultimately depend on the circumstances.

Whether the plaintiff’s side of the story was sought and accurately reported

McLachlin CJ said this factor ‘speaks to the essential sense of fairness the defence is intended to promote’ and described it as the core Reynolds factor. Her Honour also noted that failure to provide the other side of the story to comment can, in some cases, heighten the risk of inaccuracy. However, the issue with this factor is that providing a subject with an opportunity to comment can sometimes lead to the subject purposely stalling, with the intention of making the story disappear. To address this issue, the court appears to be more concerned with whether the comment was sought and whether there was a reasonable opportunity to respond.

The court cautioned, ‘in most cases, it is inherently unfair to publish defamatory allegations of fact without giving the target an opportunity to respond’. However, this provision has been criticized as being burdensome or even unworkable for ‘lay media’ who publish through informal means and do not have access to the same resources as professional journalists and media outlets.

Whether inclusion of the defamatory statement was justifiable

This factor does not expressly appear on the list of Reynolds factors, however it can certainly be implied. As previously discussed, the Supreme Court said it is for the jury to determine if the statement was necessary to communicating on a matter of public interest. In considering this particular factor, the jury is to give editorial decision-making a generous amount of deference.

Whether the defamatory statement’s public interest lay in the fact that it was made rather than its truth? (‘Reportage’)

As a general rule to defamation, repeating a libel attracts the same legal consequences as the originating statement. Here, the Supreme Court affirmed this rule, maintaining that one should not be able to freely publish a ‘scurrilous libel’ simply by attributing it to someone else. The court said this rule is especially important in the internet age, where defamatory material can spread with ease and at great speed. Nevertheless, the Supreme Court held that the repetition rule does not apply to fairly reported statements whose public interest lies in the fact they were made. This is called ‘reportage’.

The court laid out a sub-test, saying a publisher will incur no liability for re-publishing a defamatory statement, provided:

1) The report attributes the statement to a person;

2) The report indicates that its truth has not been proven;

3) The report sets out both sides of the dispute fairly; and

4) The report provides the context in which the statements were made.

If the jury is satisfied that the defamatory statement is reportage, it must still find its publication was reasonable in the circumstances. The application of this factor will be discussed further in the analysis of a hypothetical scenario. In Reynolds, reportage was not expressly listed as a factor for consideration. However, some post-Reynolds decisions have applied its factors in deciding matters involving defamation in reportage.

Other considerations

As with the Reynolds factors, the Grant factors are non-exhaustive and are meant to serve as a guide to establishing whether a communication was responsible. Ultimately, any relevant matter may be considered by the jury.

While the Grant factors are very similar to those in Reynolds, there are several differences. The Supreme Court did not include in its list:

• the steps taken to verify the information;

• the status of the information;

• whether the article contained the gist of the plaintiff’s side of the story;

• the timing of the publication; and

• the overall tone of the article.

For the most part, these factors can be interpreted into the Grant factors. However, the Supreme Court noted that the tone of the article may not always be relevant to responsibility. MacLachlin CJ said of this factor: ‘[t]he best investigative reporting often takes a trenchant or adversarial position on pressing issues of the day’.

As well, the court noted that malice should always be a relevant consideration, as a defendant who has acted with malice in publishing defamatory allegations has, by definition, not acted responsibly.

As previously stated, the presiding judge will decide whether the statement is a matter of public interest, and if shown, the jury will decide if the defence is established, having considered the relevant factors. It should be noted that Abella J of the Supreme Court concurred with the majority, however her Honour held that the defence is a highly complex legal determination with constitutional dimensions, and as a result, establishing the defence goes beyond the jury’s jurisdiction and ‘squarely into judicial territory’. This, however, was not the opinion of the majority of the court.

The application of the responsible communication defence in Australia

There are several key differences between the Australian approach to qualified privilege and the responsible communication defence. For example, both s 30 of the NUDL and the approach under Lange focus on reasonableness. Following the approach of the New Zealand courts, the Supreme Court of Canada rejected any requirement of reasonableness, instead focusing the availability of the defence on the responsibility of the publisher. The Supreme Court noted that the Australian test of reasonableness is far more stringent than a test of responsibility.

Another important difference is the role of the jury. One of the criticisms of s 30 of the NUDL is that the questions of whether the publisher acted reasonably is treated as a question of law to be decided by a judge, rather than a question of fact to be decided by a jury.179 Under the responsible communication defence, the jury assesses whether the communication was responsible.

It is also worth noting that the responsible communication defence is deeply rooted in Canadian Charter values — namely, the freedom of expression. Australia, on the other hand, does not have a national charter or bill of rights. The 1898 Constitutional Convention of Australia rejected a proposal to include an express guarantee of individual rights. Ninety years later, Australians rejected the proposal of including express rights into the federal Constitution in what was the greatest defeat of any referendum proposal since Federation. However, Victoria and the Australian Capital Territory have both enacted their own respective human rights legislation, both of which contain a freedom of expression provision. While an argument could be made that these jurisdictions may introduce the responsible communication defence at the state and territory level, this result is highly unlikely as it would defeat the entire purpose of having national uniform defamation legislation.

Ultimately, the responsible communication defence is significantly more media-friendly than qualified privilege. As discussed, the new defence is founded upon the English common law principles that have emerged over the past decade. When it comes to qualified privilege, the respective laws of England and Australia have very little in common. Australian courts have, on several occasions, rejected the implementation of a Reynolds-style privilege, despite calls from within the Australian legal community to further develop qualified privilege to better protect the publication of public interest news and commentary.

Nevertheless, the High Court left open the possibility of expanding qualified privilege, saying in Lange that the common law defence of qualified privilege could go ‘beyond what is required for the common law of defamation to be compatible with the freedom of communication required by the Constitution’. With the introduction of s 30 of the NUDL, qualified privilege has certainly been expanded, at least in relation to the subject matter it protects. However, the burden of reasonableness remains.

In Rogers v Nationwide News, Gleeson CJ and Gummow J noted that reasonableness is meant to be considered by balancing the freedom of speech on the one hand, and the individual’s interest in protecting their reputation on the other. Their Honours went on to say that in terms of reasonableness, a defendant seeking to rely on statutory qualified privilege ‘will have to explain how the error came to be made, and why it could not reasonably have been avoided, bearing in mind the harm it was likely to cause’. These statements of law are very similar to those expressed by McLachlin CJ of the Canadian Supreme Court in Grant. It also appears that reasonableness and responsibility could be used interchangeably. Perhaps it would not be a major shift in law for a defence of responsible communication to exist in Australia after all. For example, in Hansen v Harder, the British Columbia Court of Appeal heard a defamation matter involving a student newspaper at Simon Fraser University and the financial and services coordinator of a student union. The newspaper published an article that inferred the respondent was guilty of fraud and misappropriation of monies from the student union. The Court of Appeal did not allow the appellants to rely on the responsible communication defence because they relied too heavily on an unreliable forensic report, were not sufficiently diligent in verifying their information, and did not diligently seek comment from the respondent. The court said the appellants did not act responsibly in publishing the information. Had the court assessed the same fact scenario with s 30 of the NUDL, it is very likely the appellants conduct would have failed the reasonableness test as well. Under s 30(3) of the NUDL, the court can take into account, among other things, the integrity of the sources relied upon, the steps taken to verify the information published, and whether a reasonable attempt was made to obtain a response.

Conclusion

Critics of the public interest responsible communication defence said it moves the focus of a libel action away from the plaintiff’s ability to prove the statements complained about were false, in addition to making libel actions more complex and costly by requiring an exhaustive analysis of the actions of the publisher. Nonetheless, the decision in Grant was heralded as ‘perhaps the most significant development in the case of Freedom of Expression vs Protection of Reputation in recent years’.

In a research paper published in 2004 by the Melbourne University Law Review, author Andrew Kenyon interviewed nearly 30 Australian defamation practitioners about the position of qualified privilege at that time. The general consensus from those interviewed was that the law in Australia should be reformed to a Reynolds-style privilege.

Kenyon’s research on qualified privilege ‘points towards a broader and stronger Australian defence — one that is neither limited to a narrow version of political communication, nor requires an onerous standard of reasonableness’. As previously mentioned, Australian courts have rejected the expansion of qualified privilege to a Reynolds-style privilege. But instead of expanding and tampering with qualified privilege, Australian common law could introduce a new defence outright, as did the Ontario Court of Appeal and Supreme Court of Canada.

The circumstances that lead to the introduction of the responsible communication defence in Canada are similar to the current circumstances in Australia. As noted by McLachlin CJ, prior to the introduction of the new defence, it was ‘uncertain when, if ever, a media outlet can avail itself of the defence of qualified privilege’. As well, Australia and Canada have very similar common law traditions and the two nations share very similar social values. While not constitutionally entrenched, the High Court has recognised that the freedom of expression and the freedom of the press are important values to Australian law and society. Both freedoms are essential to the free exchange of ideas that govern an open society.

Even with the statutory reform of the NUDL, potential impediments to free expression and hurdles to investigative journalism remain. It is implicit in their duty that the courts will, from time to time, take a fresh look at the common law and re-evaluate its consistency with evolving societal values. In the age of the internet, traditional journalism has been flipped on its head. The rigidity of qualified privilege and its focus on reasonableness conflicts with the exchange of ideas and information that has proliferated online since the late 1990s. The responsible communication defence is plainly intended to shift the law of defamation away from its constricting reputation-protection stance to freer and more open discussion on matters of public interest. As noted by the Supreme Court of Canada in WIC Radio, freewheeling debate on matters of public interest is to be encouraged, and not thwarted by overly solicitous regard for personal reputation.

It should also be noted that protection of reputation is also an important value to Australian society. Nevertheless, as noted by Mason CJ, Gaudron and Toohey JJ in Theophanous:

The common law defences which protect the reputation of persons who are the  subject of defamatory publications do so at the price of significantly inhibiting free  communication. To that extent, the balance is tilted too far against free  communication and the need to protect the efficacious working of representative  democracy and government in favour of the protection of individual reputation.

Despite the evolutions in law since Theophanous, the ‘chill’ of defamation suits that inhibit media outlets continue to exist. It is for this reason that Australian society, motivated by a freer exchange of ideas, may benefit by adopting the defence of responsible communication on matters of public interest. This would serve to bring clarity to what can and cannot be reported, as well as protect publishers who are reporting a matter of public interest but may not be afforded the protection of either the current common law or statutory branch of qualified privilege. Ultimately, credence would be given to Cockburn CJ’s 150-year-old statement that ‘a man has a right to publish, for the purpose of giving the public information, that which it is proper for the public to know’.

Footnotes:

(1) [2001] 2 AC 127; [1999] 4 All ER 609.

(2) (1817) 2 Stark 297; 171 ER 652.

(3) Ibid 301, 653.

(4) Cox v Feeney (1863) 4 F & F 13, 19; 176 ER 445, 448 (approving an earlier statement by Lord Tenterden CJ).

(5) Goldsborough v John Fairfax & Sons Ltd (1934) 34 SR (NSW) 524, 530.

(6) Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104, 175.

(7) Mark Pearson and Mark Polden, The Journalist’s Guide to Media Law (Allen & Unwin, 4th ed, 2011) 220.

(8) Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104, 133.

(9) Ibid.

(10) (1997) 189 CLR 520 (‘Lange’).

(11) Ibid 566.

(12) For a further discussion, see Andrew Kenyon, ‘Lange and Reynolds Qualified Privilege: Australian and English Defamation Law and Practice’ (2004) 28 Melbourne University Law Review 406.

(13) Roberts v Bass (2002) 212 CLR 1.

(14) See Civil Laws (Wrongs) Act 2002 (ACT) Ch 9; Defamation Act 2005 (NSW); Defamation Act 2005 (NT); Defamation Act 2005 (Qld); Defamation Act 2005 (SA); Defamation Act 2005 (Tas); Defamation Act 2005 (Vic); Defamation Act 2005 (WA).

(15) Des Butler and Sharon Rodrick, Australian Media Law (Law Book Co, 3rd ed, 2007) 28.

(16) Defamation Act 2005 (NSW) s 30; Defamation Act 2005 (SA) s 28; Defamation Act 2005 (NT) s 27; Civil Laws (Wrongs) Act 2002 (ACT) s 139A.

(17) [2001] 2 AC 127; [1999] 4 All ER 609 (‘Reynolds’).

(18) Reynolds v Times Newspapers Ltd [2001] 2 AC 127 at 133; [1999] 4 All ER 609, 613.

(19) Ibid.

(20) Grant v Torstar Corp [2009] 3 SCR 640, [35].

(21) Specifically the freedom of expression in Canada Act 1982 (UK) c 11, Sch B Pt I, s 2(b) (‘Canadian Charter of Rights and Freedoms’), and with respect to the protection of reputation discussed at length in Hill v Church of Scientology of Toronto [1995] 2 SCR 1130.

(22) [2009] 3 SCR 640.

(23) Ibid [85].

(24) Dean Jobb, The Responsible Communication Defence: What’s in it for Journalists? (23 December 2009) J-Source.ca <http://j-source.ca/ article/responsible-communicationdefence- whats-it-journalists>.

(25) See Defamation Act 2005 (SA) s 28; Defamation Act 2005 (NT) s 27; Civil Laws (Wrongs) Act 2002 (ACT) s 139A.

(26) Butler and Rodrick, above n 15, 71.

(27) Ibid.

(28) Australian Broadcasting Corporation v Comalco Ltd (1986) 12 FCR 510.

(29) Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104; Stephens v West Australian Newspapers Ltd (1994) 182 CLR 211.

(30) Kenyon, above n 12, 415.

(31) (1997) 189 CLR 520.

(32) Ibid 571.

(33) Kenyon, above n 12, 416.

(34) Lange v Australian Broadcasting Corporation (1997) 189 CLR 520, 573.

(35) Butler and Rodrick, above n 15, 84.

(36) Amalgamated Television Services Pty Ltd v Marsden [2002] NSWCA 419 (24 December 2002) [1169]; Griffith & Macartney-Snape v Australian Broadcasting Corporation [2008] NSWSC 764 (1 August 2008) [758].

(37) Lange v Australian Broadcasting Corporation (1997) 189 CLR 520, 570, 572; Atkas v Westpac Banking Corporation (2010) 241 CLR 79, 87.

(38) Megna v Marshall [2010] NSWSC 686 (25 June 2010) [50].

(39) (2010) 241 CLR 79.

(40) Ibid 94.

(41) Ibid 100, 111.

(42) See Defamation Act 2005 (SA) s 28; Defamation Act 2005 (NT) s 27; Civil Laws (Wrongs) Act 2002 (ACT) s 139A.

(43) Pearson and Polden, above n 7, 227.

(44) Ibid.

(45) See s 30(3) of the national uniform defamation legislation; Defamation Act 2005 (SA) s 28(3); Defamation Act 2005 (NT) s 27(3); Civil Laws (Wrongs) Act 2002 (ACT) s 139A(3).

(46) Commonwealth, Attorney General’s Department, Revised Outline of a Possible National Defamation Law (July 2004) 21–23.

(47) Roberts v Bass (2002) 212 CLR 1; Section 30(4) of the national uniform defamation legislation; Defamation Act 2005 (SA) s 28(4); Defamation Act 2005 (NT) s 27(4); Civil Laws (Wrongs) Act 2002 (ACT) s 139A(4).

(48) Roberts v Bass (2002) 212 CLR 1, 32.

(49) Ibid 31.

(50) Butler and Rodrick, above n 15, 85.

(51) Ibid 646.

(52) Ibid 654 (Lord Hope).

(53) Ibid 619 (Lord Nicholls).

(54) Ibid 625.

(55) Ibid 626.

(56) Ibid.

(57) David Hooper, ‘The Importance of the Jameel Case’ (2007) 18 Entertainment Law Review 62, 62. See also Iam Cram, ‘Political Expression, Qualified Privilege and Investigative Journalism — An Analysis of Developments in English Defamation Law Post Reynolds v Times Newspapers’ (2005) 11 Canterbury Law Review 143.

(58) [2007] 1 AC 359 (‘Jameel’).

(59) Ibid [33] (Lord Bingham).

(60) Ibid [4] (Lord Bingham).

(61) Ibid [9].

(62) Ibid [8].

(63) Ibid [56]. See also Bonnick v Morris [2003] 1 AC 300, [24] (Lord Nicholls).

(64) Ibid [51].

(65) Lange v Australian Broadcasting Corporation (1997) 189 CLR 520, 574.

(66) Bonnick v Morris [2003] 1 AC 300, [23].

(67) (2007) 286 DLR (4th) 196 (‘Quan’).

(68) Ibid [24].

(69) Ibid [25].

(70) Ibid [26].

(71) Quan v Cusson [2009] SCC 62, [24].

(72) Ibid [22].

(73) Cusson v Quan (2007) 286 DLR (4th) 196, [150].

(74) Ibid [149].

(75) Quan v Cusson [2009] SCC 62, [25].

(76) [1952] 1 SCR 275.

(77) Ibid 287.

(78) [1969] SCR 277.

(79) Ibid 279.

(80) Ibid 281.

(81) Ibid 284.

(82) Ibid 285; Douglas v Tucker [1952] 1 SCR 275, 287.

(83) Jones v Bennett [1969] SCR 277, 284.

(84) Stopforth v Goyer (1979) 23 OR (2d) 696 (CA).

(85) Ibid 699.

(86) See Parlett v Robinson (1986) 30 DLR (4th) 247 (BCCA); Grenier v Southam Inc [1997] OJ No 2193; Young v Toronto Star Newspapers Ltd (2003) 66 OR (3d) 170 (SCJ).

(87) [1995] 2 SCR 1130.

(88) Ibid [51].

(89) Ibid [95] (Cory J).

(90) Ibid [100].

(91) Canadian Charter of Rights and Freedoms, s 2(b).

(92) Hill v Church of Scientology of Toronto [1995] 2 SCR 1130, [120].

(93) Ibid [106].

(94) Cusson v Quan (2007) 286 DLR (4th) 196, [122].

(95) Ibid [137].

(96) Ibid [141].

(97) Ibid [143].

(98) Grant v Torstar Corp [2009] 3 SCR 640, [17].

(99) Ibid [18].

(100) Ibid [19].

(101) Ibid [20].

(102) Grant v Torstar Corporation [2008] ONCA 796.

(103) Ibid [106].

(104) Ibid [63].

(105) Ibid [64].

(106) Ibid [107].

(107) Grant v Torstar Corp [2009] 3 SCR 640, [25].

(108) Ibid [26].

(109) Ibid [37].

(110) Ibid [39]–[40].

(111) Ibid [42].

(112) Canadian Charter of Rights and Freedoms, s 2(b).

(113) Hill v Church of Scientology of Toronto [1995] 2 SCR 1130.

(114) Grant v Torstar Corp [2009] 3 SCR 640, [46].

(115) Ibid [51].

(116) Ibid [66].

(117) New York Times Co v Sullivan, 376 US 254 (1964).

(118) Curtis Publishing Co v Butts, 388 US 130 (1967).

(119) Grant v Torstar Corp [2009] 3 SCR 640, [67].

(120) Lange v Australian Broadcasting Corporation (1997) 189 CLR 520.

(121) Lange v Atkinson [2000] 3 NZLR 385.

(122) National Media Ltd v Bogoshi [1998] 4 SA 1196.

(123) Grant v Torstar Corp [2009] 3 SCR 640, [85].

(124) Reynolds v Times Newspapers Ltd [2001] 2 AC 127 at 204; [1999] 4 All ER 609, 625.

(125) Grant v Torstar Corp [2009] 3 SCR 640, [90].

(126) Loutchansky v Times Newspapers Ltd (No 2) [2002] QB 783; [2002] 1 All ER 652, [35] (Lord Phillips).

(127) Grant v Torstar Corp [2009] 3 SCR 640, [92].

(128) Ibid [93].

(129) Ibid [95].

(130) Ibid [96].

(131) Jameel v Wall Street Journal Europe [2007] 1 AC 359, [54].

(132) Grant v Torstar Corp [2009] 3 SCR 640, [98]; Cusson v Quan (2007) 286 DLR (4th) 196, [143].

(133) Grant v Torstar Corp [2009] 3 SCR 640, [98].

(134) London Artists Ltd v Littler [1969] 2 QB 375, 391; affirmed by the Supreme Court of Canada in Grant v Torstar Corp [2009] 3 SCR 640, [104], and by the Australian High Court in Bellino v Australian Broadcasting Corporation (1996) 185 CLR 183, 193.

(135) Grant v Torstar Corp [2009] 3 SCR 640, [100].

(136) Ibid [101].

(137) Ibid [106].

(138) Ibid [107].

(139) Ibid [108].

(140) Jameel v Wall Street Journal Europe [2007] 1 AC 359, [51].

(141) Grant v Torstar Corp [2009] 3 SCR 640, [142].

(142) Ibid [109].

(143) Ibid [111].

(144) Ibid.

(145) Reynolds v Times Newspapers Ltd [2001] 2 AC 127 at 205; [1999] All ER 609, 626.

(146) Grant v Torstar Corp [2009] 3 SCR 640, at [112].

(147) Ibid.

(148) Reynolds v Times Newspapers Ltd [2001] 2 AC 127 at 205; [1999] All ER 609, 626.

(149) Ibid.

(150) Grant v Torstar Corp [2009] 3 SCR 640, [113].

(151) Ibid.

(152) Ibid.

(153) Reynolds v Times Newspapers Ltd [2001] 2 AC 127 at 205; [1999] All ER 609, 626.

(154) Grant v Torstar Corp [2009] 3 SCR 640, [114].

(155) Reynolds v Times Newspapers Ltd [2001] 2 AC 127 at 205; [1999] All ER 609, 626.

(156) Grant v Torstar Corp [2009] 3 SCR 640, [114].

(157) In 1790, statesman and philosopher Edmund Burke is said to have pointed to the press gallery in parliament and stated: ‘There are three estates in Parliament but in the reporter’s gallery yonder sits a fourth estate more important far than they all’; Pearson and Polden, above n 7, 28; Louis Edward Ingelhart, Press Freedoms: A Descriptive Calendar of Concepts, Interpretations, Events, and Court Actions from 4000 BC to the Present (Greenwood Press, 1987) 143.

(158) Grant v Torstar Corp [2009] 3 SCR 640, [115].

(159) Ibid [116].

(160) Ibid.

(161) Cram, above n 58.

(162) Grant v Torstar Corp [2009] 3 SCR 640, [116].

(163) Keri Gammon, DavidWotherspoon and Christian Leblanc, ‘Grant v Torstar: The Right to be (Responsible and) Wrong’ (2010) 10(11) Internet and E-Commerce Law in Canada 97, 100.

(164) Grant v Torstar Corp [2009] 3 SCR 640, [118].

(165) Truth (NZ) Ltd v Holloway [1960] 1 WLR 997, 1001.

(166) Grant v Torstar Corp [2009] 3 SCR 640, [119].

(167) Ibid.

(168) Ibid.

(169) Ibid [120].

(170) Al-Fagih v HH Saudi Research Marketing (UK) [2001] EWCA Civ 1634. For further analysis on the doctrine of reportage and the Reynolds decision, see Jason Bosland, ‘Republication of Defamation Under the Doctrine of Reportage — The Evolution of Qualified Privilege in England and Wales’ (2011) 31(1) Oxford Journal of Legal Studies 89.

(171) Grant v Torstar Corp [2009] 3 SCR 640, [123].

(172) Ibid.

(173) Ibid.

(174) Ibid [125].

(175) Ibid [145].

(176) Lange v Atkinson [2000] 3 NZLR 385.

(177) Grant v Torstar Corp [2009] 3 SCR 640, [81].

(178) Ibid [79].

(179) Pearson and Polden, above n 7, 228.

(180) Grant v Torstar Corp [2009] 3 SCR 640, [130].

(181) Grant v Torstar Corp [2009] 3 SCR 640, [39].

(182) Kruger v The Commonwealth (1997) 190 CLR 1, 61 (Dawson and HcHugh JJ).

(183) Kenneth J Keith, ‘The New Zealand Bill of Rights Experience: Lessons For Australia’ (2003) 9(1) Australian Journal of Human Rights 8.

(184) Human Rights Act 2004 (ACT) s 16(2); Charter of Human Rights and Responsibilities Act 2006 (Vic) s 15.

(185) John Fairfax & Sons Ltd v Vilo (2001) 52 NSWLR 373, 378; Griffith & Macartney-Snape v Australian Broadcasting Corporation [2008] NSWSC 764 (1 August 2008) [758].

(186) Kenyon, above n 12, 407.

(187) Lange v Australian Broadcasting Corporation (1997) 189 CLR 520, 571.

(188) Rogers v Nationwide News Pty Ltd (2003) 216 CLR 327.

(189) Ibid 340.

(190) Ibid.

(191) Grant v Torstar Corp [2009] 3 SCR 640, [101].

(192) Hansen v Harder (2010) BCCA 482.

(193) Richard Dearden and Wendy Wagner, ‘Canadian Libel Law Enters the 21st Century: The Public Interest Responsible Communication Defence’ (2011) 41 Ottawa Law Review 351, 373.

(194) Gammon, Wotherspoon and Leblanc, above n 164, 97.

(195) Kenyon, above n 12.

(196) Ibid 436.

(197) Grant v Torstar Corp [2009] 3 SCR 640, [37].

(198) Davis v Commonwealth (1988) 166 CLR 79; Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57.

(199) R v Keegstra [1990] 3 SCR 697, 803.

(200) Mark Pearson, ‘A Review of Australia’s Defamation Reforms After a Year of Operation’ (2007) Bond University: Humanities and Social Sciences Papers <http://epublications. bond.edu.au/hss_pubs/238>.

(201) Grant v Torstar Corp [2009] 3 SCR 640, [46]. See, eg, R v L (1991) 174 CLR 379.

(202) Cusson v Quan (2007) 286 DLR (4th) 196, [143].

(203) WIC Radio Ltd v Simpson [2008] 2 SCR 420, [2].

(204) Theophanous v Herald & Weekly Times Ltd (1994) 182 CLR 104, 131.

(205) Ibid 133.

(206) Cox v Feeny (1863) 4 F & F 13, 19; 176 ER 445 at 448 (approving an earlier statement by Lord Tenterden CJ).

SPIS Entire Agreement Clauses

The Ontario Court of Appeal, in Soboczynski v Beauchamp, 2015 ONCA 282, analyzed when a Seller Property Information Statement (“SPIS”) can be relied on and its status as a representation as well as the impact of the “entire agreement clause” in an APS.

Facts

In 2007, the Beauchamps (“Sellers”) sold their house to the Soboczynskis (“Buyers”) without a realtor.

In 2005, Sellers decided to upgrade the basement by replacing some panelling and installed new carpet throughout.

On November 21, 2007, the Buyers signed an Agreement of Purchase and Sale (“APS”). The APS contained two conditions: 1) satisfactory home inspection & 2) satisfactory financing. Furthermore, the APS contained a clause that read:

[The APS] including any Schedule attached hereto, shall constitute the entire Agreement between Buyer and Seller. There is no representation, warranty, collateral agreement or condition, which affects [the APS] other than as expressed herein. (the “entire agreement clause”)

The next day, on November 22, 2007, the Buyers gave an SPIS to the Sellers to fill out after already picking up the signed APS. The Sellers filled out the SPIS. The SPIS concluded with the following statement:

Any important changes to this information known to the sellers will be disclosed by the sellers prior to closing.

On November 28, 2007, the Buyers waived both conditions.

The closing date was set for January 18, 2008. On January 9, 2008, the basement flooded and water entered the basement through window wells. The Sellers elected to spend $1,648.59 repairing damage but did not tell the Buyers about the incident. The Sellers reasoned this was an isolated incident and not an “important change”.

The sale closed on January 19, 2008. On February 6, 2008, after closing, the basement flooded again. The Buyers hired an expert to ensure the basement would not flood again and determined that to correct the flooding issues in the basement it would cost $22,598.17.

Eventually, the Buyers found out about the January 9, 2008 flood and commenced an action against the Sellers for damages based on fraudulent or negligent representations.

The trial judge found that the entire agreement clause acted as a bar to the action. The Buyers appealed.

Entire Agreement Clauses in Action

The Court of Appeal judge ruled the SPIS signed after the APS did not apply to the APS by virtue of the entire agreement clause. This is summed up nicely where Justice Epstein states at paragraph 41:

In my view, the answer to the question is that, in the circumstances of this case, any consequences flowing from representations made in the SPIS were outside the reach of the entire agreement clause. The entire agreement clause in the APS operates retrospectively, not prospectively. In other words, the application of the clause is restricted to limit representations, warranties, collateral agreements, and conditions made prior to or during the negotiations leading up to the signing of the APS. When the appellants made representations in the SPIS, a document completed after the APS had been signed by all parties, the entire agreement clause was spent.

The judge, at paragraph 59, likened the entire agreement clause to saying: “these are the terms of our agreement and nothing that was said beforehand is relevant. You have no basis for relying on anything other than the terms of the agreement. The agreement stands on its own.” Therefore, the purpose of entire agreement clause is to evoke certainty and clarity in contractual dealings. The entire agreement clause defines a hard line to define where the contract and the prior dealings end. Anything not specifically included or referenced in the agreement, even if in writing, will not form part of the APS.

Negligent Representations Aside from the Agreement of Purchase and Sale

In this specific situation, the post-APS conduct of the parties, showed that they intended for the SPIS to be a representation separate from the APS because both parties took the SPIS seriously and by filling out the SPIS (when they technically had no obligation to). Because of this contact, the Sellers created a separate agreement with the SPIS containing representations.  Therefore, if the Buyers could prove the elements of negligent misrepresentation on the SPIS document itself, they could claim damages.   The tort of negligent misrepresentation has five main elements:

(1) a duty of care based upon a special relationship between the plaintiff and defendant;

(2) an untrue, inaccurate or misleading statement by the defendant;

(3) negligence on the part of the defendant in making the statement;

(4) reasonable reliance by the plaintiff on the statement; and

(5) damage suffered by the plaintiff as a result.

Hedley Byrne & Co. v. Heller & Partners Ltd.,[1964] A.C. 465 (U.K. H.L.)

This argument failed primarily because the Buyers failed to prove the element of “reasonable reliance” on the representation. The damage arose from the purchase of the property. The Buyers had already decided to purchase the property prior to the signing of the SPIS- they did not rely on the information in the SPIS to make their decision, it was already made. Therefore, they could not claim that the representations in the SPIS agreement caused them damage because the decision to buy the house was unrelated to the representations made in the SPIS.

Interestingly, even though the claim for negligent misrepresentation did not succeed because of the lack of reliance, it likely would not have been successful in any event because the trial judge stated that it was “doubtful” that the damage from the January 8, 2008 flood was an “important change”. The Court of Appeal agreed with this position.

Takeaways from the Case

It is always best to deal with a qualified real estate representative to assist you in navigating a real estate transaction.

If you are a purchaser, always ensure that you have an SPIS signed prior to making an offer, or at the very latest prior to waiving your inspection condition. If an SPIS is not completed, but the seller has agreed to provide one, it may be worthwhile to add a condition in your APS providing you the ability review and approve the SPIS before the deal is binding.

Always reference the SPIS as a part of the APS, in writing. A simple statement adding the SPIS as a schedule or stating that the SPIS forms part of the agreement should suffice.

The purpose of entire agreement clauses are meant to substantiate everything up to the actual signing of the APS. Anything not included within the agreement (or specifically referred to in the agreement) or obtained after signing cannot be relied upon.

An SPIS can be used to claim negligent misrepresentation separate from the APS depending on the circumstances of the transaction, but the elements of negligent misrepresentation all must still be found to succeed on the claim.

Condominium Common Elements

Condominium Common Elements: Additions, Alterations and Improvements

Ontario condominium corporations are now left in uncertainty over their power to restrict changes made to common elements of individual units. The purpose of section 98 of the Condominium Act, 1998 is to prohibit unit owners from making changes to the common elements of their condos unless they receive permission from the Board of Directors. Condominium corporations have no obligation to give consent to unit owners to make changes to the common elements. Section 98 states that “an owner may make an addition, alteration or improvement to the common elements” if the Board provides approval. This provision should, in theory, give the Board complete control over changes made to the common elements of condominium units. The uncertainty derives from the question of what constitutes an addition, alteration or improvement. The ambiguity in the answer shifts the balance of decision making power slightly away from the Board and closer to the individual unit owners.

Changes Defined

On November 9, 2009, when faced with the question of whether or not a hot tub qualifies as an addition, alteration or improvement, the Ontario Court of Appeal affirmed definitions to these three terms in the case of Wentworth Condominium Corp. No. 198 v. McMahon.  Condominium unit owner, McMahon, placed a hot tub on his common element yard appurtenant to his unit without permission or approval from the Board. The Board made an application seeking removal of the hot tub on the basis that it was a change to the common elements. The Superior Court determined, after considering section 98, that the hot tub was not an addition, alteration or improvement to the common elements. To clarify this point, the Court stated that an “addition” is something that is joined or connected to a structure, an “alteration” is something that changes the structure, and an “improvement” is the betterment of the property or enhancement of the value of the property.  Since the hot tub is not connected to the property and it does not directly change the structure of the property it cannot be deemed an addition or alteration, respectively.

Furthermore, the hot tub does not improve the property or enhance its value as it can easily be removed by McMahon if he so chooses. Therefore, according to the Superior Court, the hot tub did not qualify as something that requires approval by the Board and McMahon was able to keep the hot tub. The Court of Appeal affirmed this decision and further stated that the definitions “provide a valuable starting point” for decisions relating to section 98 of the Act.

Application of McMahon

If the McMahon reasoning is the starting point for these types of cases, all future changes to condominiums should follow precedent.  The case of Metropolitan Toronto Condominium Corp. No. 985 v. Vanduzer was decided a mere three months after McMahonm on February 9, 2010 with a different result. This case had a similar fact pattern whereby the unit owner, Vanduzer, had a gazebo erected on her common element terrace appurtenant to her unit against the permission of the Board. Vanduzer argued that since the gazebo was not attached to the terrace, it should not be considered an addition to the common elements, which by the definitions affirmed in McMahon would be an accurate statement. Instead, the Court concluded that the gazebo was an addition and ordered Vanduzer to remove the gazebo from the common elements of her unit. Why was Vanduzer’s gazebo considered an addition to the common elements while McMahon’s hot tub was not?

Distinguishing McMahon and Vanduzer

The hot tub in McMahon was a free-standing six feet wide, seven feet long self contained unit. It was not attached to the common elements in any structural way. Its only connection to the unit is the cord that provided it with electricity. Vanduzer’s gazebo, on the other hand, although not actually attached to the unit was considered an addition. The difference was in the installation. Vanduzer had the gazebo installed incorrectly. The manufacturer’s intended installation of the gazebo clearly stated that, for structural reasons, it must be attached to the ground. The Court concluded that if Vanduzer had correctly installed the gazebo, it would have fallen under the definition of an addition and would therefore be considered a change which would require Board approval.
Other Considerations

The Court also considered that the condominium corporation has a statutory duty, under section 26 of the Act, to manage the common elements of the building. With this duty comes liability for the safety and protection of other unit owners and guests. The hot tub, installed correctly, posed no danger to other people; while the incorrectly installed gazebo, arguably, could pose a threat to other residents.

Lessons Learned

There are some lessons to be taken from these two cases. By definition, an individual condominium unit holder has no right to make changes to the common elements of their unit. They have, however, gained more flexibility in what is a restricted change. McMahon may have opened a loophole for unit holders to rely on to evade the restrictions stated in section 98 of the Act. As long as the change does not fall within the definitions of addition, alteration or improvement, the unit owner is able to do as he or she pleases. Additions such as barbeques, picnic tables, or even small inflatable pools should be permitted. Some may argue that Vanduzer closed this loophole; but, the Court in Vanduzer actually used the definitions in the way they were intended. The gazebo should have been attached to the ground. If it were, it would have been an addition. Incorrect installation of an object will not fool the Court into allowing prohibited changes. The power of the condominium corporation to restrict changes to common elements may have been slightly narrowed, but the power of the courts to ensure proper application of the law is as strong as ever.

Condo Pet Bylaws

Is Your Pet Too Big? Pet Bylaws in Condominiums

The Supreme Court of British Columbia has ruled that breaching a Condominium’s Pet Bylaw can result in a permanent injunction enjoining and restraining a pet-owner from bringing his or her pet back into the common property.  The ruling comes from the March 27, 2012 decision in Strata Plan LMS 2629 v. Blondin, where the Pet-owners breached the Pet Bylaw by keeping a dog that exceeded the height restriction of the Pet Bylaw in their strata unit.  The Court also addressed the issue of applicable fines against the tenants resulting from their Bylaw breach.

Facts

The Respondents are owners of a Strata unit located in Langley, British Columbia. Before adopting their dog, the Respondents approached one of the members of the Strata Council, Gar Anderson, then the Vice President, and asked for approval to have a dog in their unit.  Mr. Anderson signed a handwritten note approving a dog in their unit, however, the note made no reference to the size of the dog to be adopted.

He understood the note to simply be a prerequisite for adoption from the adoption agency.  The Strata council received complaints about the dog exceeding the height restriction of the Pet Bylaw. The Council wrote to the Respondents bringing the matter to their attention and providing them with an opportunity to respond to the complaint. The Respondents presented their case in front of the Council and it was decided that a resolution would be put forward determining whether to amend the Pet Bylaw by removing the height and weight restriction.  The resolution was defeated.

The Council considered all the requests from the Respondents on the oversized dog issue but decided to uphold and enforce the Pet Bylaw.  The Respondents were advised that failure to remove the dog would result in a fine of $200 per week.

Arguments

The Strata Corporation argued that the Respondents had an oversized dog in their strata unit without a prior exemption and were therefore in violation of the Pet Bylaw.  The Respondents argued that they obtained written approval by Mr. Anderson which constituted an exemption under the Bylaw 4(10) and were thus not in breach of the Pet Bylaw.  They Respondents also argued that  Mr. Anderson  had an indirect interest in the issue because it was he who signed the note and therefore should not have been able to participate in the Council decision finding them in breach of the Bylaw.

Decision

The court ruled that that the Respondents did not obtain a proper exemption from the Strata Council authorizing them to have a dog that exceeded the height restriction of the Pet Bylaw.  No formal request was made by the Respondents to the Strata Council as a whole.  Furthermore, the permission note signed by Mr. Anderson did not mention anything about a request for an exemption from the height restriction of the Pet Bylaw.  Additionally, Mr. Anderson on his own could not authorize an exemption from the pet height restriction.  It was a matter that needed to be addressed by the Strata Council as a whole.

The court struck down the argument that Mr. Anderson had an indirect interest in the issue and therefore should not have been able to participate in the Council decision finding the Respondents in breach of the Pet Bylaw.  The court stated that he did in fact have a marginal interest in the matter as to whether he had signed the note and granted an exemption but this was largely irrelevant as he could not, on his own, grant such an exemption.

The Court enforced the Council’s implementation of fines for breach of the Pet Bylaw.  The dog was kept in the Strata Unit for a total of 35 weeks and with weekly fines of $200 per week,  the total fine levied amounted to $7,000.

The Court also issued a permanent injunction enjoining and restraining  the respondents from bringing the dog back into the common property.

Similar restriction in Ontario

The Ontario Court of Appeal decision in York Condominium Corp. No. 382 v. Dvorchik upheld the condominium’s rule restricting the size of pets to 25 pounds.  Compliance with such a rule requires the removal of any pet from the condominium that weighs more than 25 pounds.

Implications for Realtors

KRAWCHUK v SCHERBAK – IMPLICATIONS FOR REALTORS

The Ontario Court of Appeal has recently made it clear that a salesperson will be held liable for not fulfilling duties to their clients that are set out in the Real Estate Council of Ontario’s Code of Ethics (the “Code”).  This case serves as a reminder to real estate salespersons to be very careful when assisting sellers with the Seller Property Information Sheet (“SPIS”) and when acting as a dual agent.

FACTS

The sellers took the time to fill out a seller property information sheet, but did not do it accurately.  In response to the question “Are you aware of any structural problems?”, they had replied, “NW corner settled” and “No further problems in 17 years”.

In response to the question “Are you aware of any problems with the plumbing system?”, they had replied “No”.  In reality, they knew that the foundation of the house was seriously compromised and that there were ongoing plumbing problems.

The house is built on a peat bog and had experienced significant settling.  It was clear to the naked eye that it had settled. The floors were sloped and the lines of bricks showed a sloping to a corner. There was significant evidence of foundation cracking and repairs.

In relation to the plumbing, there was a pit in the basement covered over with a steel plate. The sewage from the house flowed into the pit and then drained into the municipal sewage system.

To further complicate matters, both the purchaser and the vendors used the same real estate sales representative for the transaction.  The sales representative “encouraged” the purchaser to sign a “clean” offer so that her offer would be the one accepted. Accordingly, the conditions (financing and inspection) were removed. She offered $110,100 for the house and the offer was accepted.

Immediately after moving in, the purchaser found a buildup of sand in the crawl space.  A few days later there was more. Investigation disclosed the house had to be lifted off the foundation.  The foundation had to be removed, along with significant subsoil, and replaced with engineered fill. New footings, foundation and a basement floor were poured and the housed placed onto the new foundation. Removing and replacing the house caused significant cracking and repairs were required as a result.  Cost of the repair was $190,000.00.

It was evident the seller had tried to hide some of the issues because when the buyer viewed the house, there was significant chalk graffiti on the exterior concrete wall where the cracking had occurred and been repaired, making it harder to notice.  The vendors had also put an air freshener on the underside of the steel plate in the basement to mask the sewage smell.

DECISION

The Trial Court found the vendors liable for negligent misrepresentation and awarded the plaintiff purchaser damages of $110,742.32 but did not find any liability for the salesperson.  On appeal, it was found that the salesperson and the agency were 50% responsible along with the vendor.

The Court held that the sales representative was negligent to the purchaser for failing to recommend they have a qualified inspector provide an opinion about material issues affecting the house, as well as for failing to explain the risks of not making the offer conditional on a home inspection.  It was also found that the salesperson was negligent for not properly assisting the seller with the vendor disclosure form.

In addition to the damages, the Court of Appeal awarded the purchaser $27,780 in legal costs and interest.

COURTS REASONING FOR FINDING THE SALESPERSON LIABLE

The Court’s reasoning included the fact that the sales representative had plenty of reasons to question the authenticity of the vendors’ assurances in the SPIS which stated the settlement problems were resolved.  The salesperson knew that the house had a history of settlement problems and accordingly it was underpriced.  In addition, the salesperson’s visual inspection of the property disclosed settlement problems.

The Court of Appeal stated that “The due diligence requirements of a real estate agent mandated by the Code, while not dispositive, are of considerable importance in informing what is expected of real estate agents in terms of verifying information about a property listed for sale”.  The Court also hi-lighted previous cases which indicate that a sales representative’s duty to his or her client includes a duty to investigate material information about the property.

The Court made it clear that given the obvious defects in this house, the salesperson had to either further verify the assurances themselves, or recommend, in the strongest terms, that the purchaser get an independent inspection either before submitting an offer or by making the offer conditional on a satisfactory inspection.  The failure to do either was an ‘egregious lapse’.

WHAT DOES THIS DECISION MEAN FOR A REAL ESTATE SALES RESPRESENTATIVE?

This case serves as a reminder that sales representatives always have a duty to provide a certain level of guidance when a client is filling out or receiving a disclosure statement.  If acting as a seller’s agent and assisting in the completion of the SPIS, the representative has to exercise reasonable care and skill in ensuring its accuracy.  In this Court of Appeal case, the salesperson failed to meet the standard of care.  There were obvious defects in the house and the sales representative obviously knew the vendor disclosure form was not accurate.  They should have questioned the vendors further and appropriately counseled them with respect to the implications of the representations on the SPIS.

The Court of Appeal continually discussed the Code and a salesperson’s obligations to abide by it.  The Code provides guidelines that should always be followed, but above all else, use common sense!  If the seller is obviously trying to commit fraud, as in this case, do not turn a blind eye or you could find yourself in some serious trouble.  Sales representatives should always be proactive and inform the vendors about the implications of misrepresenting information in the vendor disclosure form and help counsel clients when they are filling out the form.

Another issue not discussed in this case is whether a sales representative can just tell the seller they are not giving any advice on how to fill out the SPIS?  In past cases, salespersons have argued that they had nothing to do with the SPIS and they just left it up to the seller to complete.  Although the courts have not provided a well defined test or standard of care to be followed, the trend in the case law tends to suggest this defence may not always work for a sales representative.  It would be prudent of all representatives to go further and provide assistance when the SPIS is being filled out.

The standard of care is always going to be more onerous when acting in a dual relationship.  Any decisions made by a salesperson are going to be scrutinized more carefully if they are acting for both the vendor and the purchaser.  In this situation, you should be extra careful and either take measures to verify the information provided by the vendors or strongly recommend to purchasers that they undertake an inspection of the property and make the closing conditional upon passing the inspection.

As one would expect, the Court in this case also focused on the fact that this sales representative encouraged the purchaser to waive the inspection condition.  Be very careful if ever discouraging parties to a transaction from seeking outside professional advice.  You should always encourage parties to seek professional advice when appropriate.  With the market this year, many buyers in Thunder Bay have been frustrated while house hunting, and are putting in offers without any conditions.  The majority of the time, everything will work out fine, and they will be able to get financing and insurance, but you still need to be very careful when suggesting the purchaser make an offer without conditions.  At the very least, if they are adamant about making an offer without conditions, let them know the potential consequences of breaching the agreement.

On a final note, I have quickly learned as a young lawyer that I have to approach most files with the concept of CYA.  I document everything I do and you should do the same as a salesperson.  As an example, if you tell a client they should get an inspection, then I strongly suggest that you have evidence of that in case things ever go south.  Say you prepare an offer with several conditions in it and then the buyer says they are going to cross them out and initial the offer.  After you have verbally told them your recommendations, follow up with an email confirming your conversation that you recommended an inspection, that you mentioned the consequences of not having one, and notwithstanding this, they have decided to go ahead without the clause.  Although this seems like extra work, this can save you a big hassle down the road.

Condo Property Assessments

REVIEW/APPEAL

Introduction

This presentation deals with the assessment and taxation of residential condominium units in Ontario. The following areas will be covered in the presentation.

  1. Basic property tax system in Ontario;
  2. A request for review of MPAC assessments of condominium units;
  3. Appeal to the Assessment Review Board;
  4. Condominium Corporation objections to assessments under The Assessment Act on behalf of condominium owners.

Overview of the Ontario Assessment Act

The provincial government passes legislation, sets assessment policies and determines the education tax rates. Then the Municipal Property Assessment Corporation (“MPAC”) decides what the current value of the condominium unit is, the assessment value and the classification for the condominium unit. The City then determines its revenue requirements and establishes a municipal tax rate, and then proceeds to collect property taxes from the condominium unit as municipal taxes. Finally, the Assessment Review Board is an independent body or tribunal that reviews by way of an appeal from property owners their assessed value for the condominium unit.

At the present time, condominiums in Ontario have an assessed value as of 2008 and this value will be used until 2012.

The assessment for a condominium unit and the realty taxes for the condominium unit are different things. MPAC provides an assessment roll to the City each year that includes the assessed value of the condominium unit. The City then takes over and applies its mill rate to the assessment for each property in order to arrive at the amount of tax that will be charged to that condominium unit in that year. The assessed value is multiplied by the mill rate to arrive at the taxes payable.

Mill rates are determined by a budgetary process of the City that is completed each year. The City receives the assessed values from the Ministry of Revenue and determines what factors or mill rates will be necessary to produce tax revenues that will meet the revenue needs of the City for its services and school boards. The City then fixes its mill rates accordingly.

Each city has different mill rates depending on the type of property and the school support designation. The usual difference in mill rates is based on the type of property involved. For commercial/industrial properties that are occupied, there is a commercial mill rate that is used. For residential properties there is a residential mill rate that is applied.

The condominium unit owner can simply contact MPAC to verify the details about their property and to find out about the current value assessment. The owner can also ask about similar properties and how they are valued. If the condominium unit owner is still not satisfied with the responses and the way that the assessed value was determined, then there are certain procedures to be followed to have the assessed value reconsidered.

Request for Reconsideration

The condominium unit owner can file a request for reconsideration (RFR) with MPAC. This is a very informal process, inexpensive and relatively fast. There is no charge for filing an RFR. Since I’ve assumed that the condominium unit is a residential unit, the unit owner must file an RFP with MPAC before being able to file an appeal to the Assessment Review Board (ARB). An RFR must be filed no later than March 31st in the tax year for which the assessment applies.

An RFR must be in writing. It can either be by way of a letter or on the form that has been prepared already in blank by MPAC. The RFR form is available on the MPAC website. Attached as an exhibit to this presentation is a copy of the blank RFR form of MPAC as of the date of this seminar. The basis for the requested review of the assessed value must be set out and the relevant factors such as other properties that are comparable, any sales information, differences in the attributes of the unit that MPAC has used to come to an assessed value, etc. For example, the following are some common reasons why a condominium unit owner might file an RFR.

  • The assessed value of the unit appears to be different from similar condominium units in the vicinity.
  • The condominium unit has been incorrectly classified.
  • MPAC’s records are incorrect, ie. the size of the unit, the number of bathrooms, etc.
  • The condominium unit was purchased close to the valuation date at a significantly different amount than the assessed value.

On receiving the RFR, MPAC will provide information about how the condominium unit was assessed. MPAC will review the concerns that have been raised by the condo unit owner and may contact you for additional information. That information could include making a visit to the condominium unit to see whether or not there have been any changes since MPAC’s last visit, and this could increase the assessed value if substantial changes have been made that are not reflected in the assessed value. After all of this has been done, MPAC provides a written response by September 30th of that tax year and this may be extended on consent to November 30th. Also attached to this presentation is a condominium data collection template that is used by MPAC to collect information concerning the value of condominium units.

Assessment Review Board Appeal

The owner of a condominium unit may file an appeal with the Assessment Review Board (ARB”). The ARB is independent. It is a tribual established by the Province of Ontario through the Ministry of the Attorney General. The ARB hears appeals from people who believe that their properties are incorrectly assessed or classified.

There are specific forms that have to be used and fees for filing an appeal with the ARB. The ARB has a set of rules that it has established for hearing appeals from the assessed value of properties. Specific forms and time lines are set out in the rules. A condominium unit owner would have to appear at the ARB hearing to support their appeal. MPAC will also appear at the hearing, and the City could appear as well, although it usually does not.

The deadline for filing an appeal with the ARB is March 31st of the tax year. In other words, even though you may have filed an RFR with MPAC, if you haven’t got a decision yet then you have to file an appeal to the ARB to protect your position and be able to appeal to the ARB.

The hearing process is like a trial. There is a single member of the ARB that hears the evidence and initially MPAC has the onus to prove the accuracy of the assessed value. Usually MPAC will put forward comparable properties as evidence and shares this information with the condominium unit owner in advance. A notice of decision is sent out by the ARB to the condominium unit owner, MPAC and the City. MPAC then updates its records and if there is a change in the classification or current value, then the City will adjust the property taxes at that point. It is possible to request the ARB to review its decision, although this is not done very often. A decision of the ARB may be appealed to the Divisional Court, but only on questions of law. A lawyer should be retained if you are going to take that route.

Condominium Corporation Assessment Reviews on Behalf of Condominium Unit Owners

The Condominum Act, 1998 (the “Condo Act”) allows a condominium corporation to object, on behalf of all the condominium unit owners, to a tax assessment affecting the units. This law is to try and remove the procedural problems that might be encountered by a condominium corporation when all of the condominium units are affected by a MPAC assessed value and there would be no other method of representing all of the condominium unit owners on the review. The other benefit is that this will enable to condominium corporation to finance the assessment review and appeal through the common expenses of the condominium unit owners.

The Condo Act provides in Section 56(1)(f) as follows:

“56. (1) The board may, by resolution, make, amend or repeal by-laws, not contrary to this Act or to the declaration, …….
(f) to authorize the corporation to object to assessments under the Assessment Act on behalf of owners if it gives notice of the objections to the owners, and to authorize the defraying of costs of objections out of the common expenses; ….

Assessment appeal

(4) If the board has made a by-law under clause (1) (f), the corporation shall have the capacity and authority to appeal under section 40 of the Assessment Act on behalf of owners but shall not be liable for an alteration in the assessment of a unit or for any other matter relating to the appeal, except for the costs of the appeal. 2008, c. 7, Sched. A, s. 18.

Same

(5) Despite a by-law made under clause (1) (f), on written notice to the board and to the Assessment Review Board given before the hearing of an appeal under section 40 of the Assessment Act, an owner may withdraw an appeal that the corporation has made on the owner’s behalf. 2008, c. 7, Sched. A, s. 18.

Registration

(9) For each by-law of a corporation, an officer of the corporation shall certify a copy of the by-law as a true copy and the corporation shall register the copy in,
(a) the land titles division of the land registry office within the boundaries of which division the land described in the description is situated, if the land registry office has a land titles division; or
(b) the registry division of the land registry office within the boundaries of which division the land described in the description is situated, if the land registry office does not have a land titles division. 1998, c. 19, s. 56 (9).

When by-law effective

(10) A by-law is not effective until,
(a) the owners of a majority of the units of the corporation vote in favour of confirming it, with or without amendment; and
(b) a copy of it is registered in accordance with subsection (9). 1998, c. 19, s. 56 (10).”

If a condominium board of directors wants to appeal assessments on behalf of owners of condo units, it has to pass a resolution of the board making a specific by-law to authorize the condominium corporation to object to the assessments under the Assessment Act. This objection is on behalf of the owners of the condominium units and it is necessary that the board give notice of the objections to the unit owners. The purpose of the by-law is to authorize the payment of costs of objections out of the common expenses of the condominium corporation that it collects from the the unit owners.

For a by-law passed by the board of directors relating to objections for assessments under the Assessment Act (“Assessment By-Laws”), the by-law must meet certain requirements before it is effective. The by-law is not effective until the owners of a majority of the units of the condominium corporation vote in favour of confirming it, with or without amendment, and a copy of the by-law has to be registered in accordance with the Condo Act.

The Assessment By-Law must be registered in the Land Titles Office. A certified copy of the by-law is registered. The purpose of the by-law being registered is so that any purchasers of the condominium units will have notice of that by-law being in effect. As well, since the by-law is not effective unless a majority of the owners of the units vote in favour of it, then the current owners of the units will have notice of the by-law being passed.

Once the Assessment By-Law is passed, then the condominium corporation has the capacity and authority to appeal under Section 40 of the Assessment Act on behalf of the individual unit owners. The condominium corporation is specifically exempted from any liability for an alteration in the assessement of a condominium unit or for any other matter relating to the appeal, except for the costs of the appeal. In other words, if the appeal results in a higher assessed value, or if the appeal is unsuccessful and no appeal can be launched by an individual unit owner for that same taxation year, then no claim is available against the condominium corporation by the individual unit owners. The condominium corporation is responsible for the costs of the appeal. In other words, the ARB can award costs of the hearing against the condominium corporation, and those costs would then be added to the common expenses of the condominium corporation and would therefore be paid for by the individual unit owners. As well, the legal and other costs of the condominium corporation in appealing the assessment would also be added to the common expenses.

The specific Assessment By-Law would simply say that the costs of objections are added to the common expenses. Since the declaration of the condominium corporation sets out what percentage of the common expenses each unit holder is responsible for, each unit owner pays its share of these costs of an appeal.

The Condo Act provides that a unit owner, on written notice to the board of directors, and to the ARB, may withdraw an appeal that the corporation has made on the owner’s behalf. This written notice must be given before the hearing of the appeal. Even though a unit owner may withdraw an appeal that has been made on the owner’s behalf, that does not mean that the unit owner who has withdrawn will not be responsible for its percentage share of the costs of the appeal. In fact, the opposite is true. As set out above, the Assessment By-Law would normally provide that the costs of the appeal are added to the common expenses, and once that is done then all of the condominium unit owners would be responsible for their share of those costs as part of the common expenses. Since the declaration sets out what the percentage contribution of each unit owner is to the common expenses, it is arguable that the only way to exclude costs of the appeal from all of the common expenses would be to amend the declaration, which requires the approval of almost all of the condominium unit owners.

The Condo Act sections that allow a condominium corporation to pass an Assessment By-Law are still relatively new. There have not yet been any cases providing more clarity on the extent of the application and limits, if any, on this kind of a by-law. There are also not any ARB decisions that I am aware of relating to an appeal by a condominium corporation of an assessment on behalf of the unit owners. As cases are heard, the limitations and requirements for the process of a condominium corporation appealing property assessments on behalf of its unit owners will evolve. It will also be of interest to see the circumstances, if any, under which the ARB and judges will protect or require corporations to pay costs associated with the appeal process.

In summary, there are certain things that should be realized when a condominium corporation is in the process of passing an Assessment By-Law, and some of those things are as follows.

  • The directors have to pass a specific by-law authorizing the condominium corporation to make such appeals.
  • The by-laws has to be approved by a majority of the unit owners to be effective.
  • Once a by-law is passed, then the costs of the appeal will apply to all unit owners even if some owners have withdrawn from the appeal process.
  • There are risks to the owners of the units when the appeal is made, and this can include a costs award against the condominium corporation which will be added to the common expenses.
  • Another risk to the unit owners is that if the property’s value is found to be higher, then they are bound by the decision for at least that year.
  • The unit owner does not get to have an appeal of the assessed value without any cost, the costs of the appeal come out of the common expenses.

Conclusion

In conclusion, the owners of condominium units should be aware of the assessed value of their condominium units and how that impacts on their taxes. There are procedures available to the individual unit owners to have the assessed value reviewed, and if necessary appealed to the ARB. There are costs involved in proceeding to an ARB appeal, and if there are sufficient common interests to the various unit owners, then there may be a benefit to having those costs spread over all the unit owners.

The Condominium Act provides for a method of passing a by-law to allow the condominium corporation to object to assessments on behalf of the owners. Even if the by-law is passed, before the condominium corporation can proceed with the objection to assessment it has to give notice of the objection to the owners involved, and that objection could end up in additional common expenses being paid by the unit owners for the cost of the objection.

Condominium Privacy

COLLECTING, STORING AND USING PERSONAL INFORMATION IN A CONDOMINIUM

The Personal Information Protection and Electronic Documents Act, S.C. 2000, c.5 (“PIPEDA”), is a privacy legislation enacted by the federal government for purposes of protecting personal information collected, used or disclosed in certain circumstances.  It also governs the use of electronic means to communicate or record information or transactions.

PIPEDA applies to all private organizations regarding personal information that the organization collects, uses or discloses in the source of commercial activities.  There is uncertainty about whether a condominium corporation would be found to engage in commercial activities.  A “commercial activity” means any particular transaction, act or conduct or any regular course of conduct that is of a commercial character.

The main obligation under PIPEDA is not to disclose any personal information collected except for proper purposes of the organization and without the appropriate informed consent of the person whose information it is.

What is personal information?

Personal information is information about an “identifiable individual”.  There are two broad categories of personal information covered by PIPEDA:

a.    Information collected, used or disclosed by any organization in the course of commercial activities; and
b.    Employee information collected, used or disclosed in connection with the operation of a federal work, undertaking or business.

PIPEDA could conceivably apply to any information about an individual that a condominium might collect, subject to some exceptions:

  • Where consent is obtained from the individual to collect and use the information;
  • Where the information is available to the public;
  • The information is used in an emergency affecting the individual;
  • The person gives their consent either implied or directly; or
  • Where the information is permitted by other statutes to be released under specified circumstances.

What can be done with personal information?

For the most part, information collected such as names, addresses, and telephone numbers, would not require the consent of unit owners for general use as long as it is related to the operation of the condominium.  General use would include notices of owners meetings, notices of liens, and information in a Status Certificate.  In contrast, information such as unlisted telephone numbers, or banking information would require consent to be used.

To release personal information to another organization, the condominium must obtain consent of the owner except in a few circumstances, when the information is:

  • given to a lawyer representing the corporation;
  • used to collect a debt;
  • used to comply with a subpoena;
  • a part of disclosure given as a result of a legal investigation;
  • contained in a public directory; or
  • used after it is either 100 years since the record was created, or 20 years since the death of the individual.

Storing the Information

How a condominium stores this information is just as important as how it uses it.  There is no single proper procedure for safeguarding Personal Information, but the following should be considered:

  • storing information in locked cabinets;
  • segregating Personal Information from general business information;
  • proper computer security to prevent unauthorized access;
  • computer files should be backed up;
  • information must never be left where cleaning staff, or a passersby can see;
  • information should never be given over the phone until the identity of the caller has been identified;
  • all staff should be trained in respect of privacy policies;
  • each unit should be assigned its own file;
  • minutes of board meetings should be drafted so as to not include Personal Information (for example, financial difficulty of an owner);
  • a privacy policy should be developed;

This list is by no means exhaustive, but should be used as a starting point for complying with privacy laws.

Responding to Curious Owners

It is clear from section 55 of the Condominium Act, 1998, (the “Act”) that owners cannot:

  • review the content of other unit files unless authorized to do so in writing by the owner of that unit;
  • review files related to ongoing litigation or insurance claims; and
  • review employee records, other than the employment contract.

This means that corporations will have to be cautious when allowing individual unit owners to access records if there is a chance they may obtain Personal Information relating to other owners.

It is imperative that Personal Information of an owner is kept in their own unit file.  There should also be a separate file for each litigation or insurance claim.  Documents should be looked over before they are shown to an owner to make sure they don’t contain personal information of other owners.

A proper procedure would be to have the individual asking for records fill out a standard form including a statement as to why they are requesting the information.  The form should also make it clear that the owner agrees that the information:

  • will only be used for matters relating to the corporation;
  • will not be distributed to anyone outside of the corporation; and
  • will not be used for personal gain.

Privacy Policies and Privacy Officers

PIPEDA requires that a corporation:

a)    establish a written “Privacy Policy” that identifies:
I.    the kind and limits of information collected;
II.    how and for what purposes such information is used; and
b)    designate an individual as a “Privacy Officer” whose responsibility will be to ensure the corporation complies with PIPEDA and the internal Privacy Policy.

If PIPEDA does apply to Condominiums, a corporation’s Privacy Policy should be consistent and probably even more strict than section 55 of the Act, which limits the rights of unit owners to access personal information in the records of the corporation.

Liability

When PIPEDA applies to an organization, every person they have Personal Information about is entitled to request to see the privacy policy and to question the privacy officer.  If an individual claims that the information contains errors, the company is required to amend it.  If an individual is not satisfied with a corporations Policy or Privacy Officer, they may complain to the Privacy Commission of Canada (“PCC”).  Violations can lead to substantial fines, and the company name can also be published as one that has not complied with the legislation.

Does PIPEDA apply to Condominiums?

It is highly unlikely PIPEDA will be found to apply to residential condominium corporations.  Residential Condominiums that do not sell information, goods or services for profit, are not involved in commercial activities.  PIPEDA was enacted in 2000, and there is yet to be a court case involving a residential condominium corporation.

Although it appears that PIPEDA would not apply to a residential Condominium corporation, it is clear that it does apply to Condominium Management companies that collect, use and disclose personal information about residents during their ‘commercial activities’.  Condominium Management companies would be considered to be performing commercial activities when they are handling the financial affairs, or performing other jobs for the corporation.

PIPEDA case #2006-342 makes it clear that the legislation applies to a landlord, as they are engaged in a commercial activity.  Even though the landlord was subject to PIPEDA in this case, the privacy commissioner found that the ‘summary of lease or renewal form’ which discloses personal information of the tenant still had to be filled out by the landlord because it is required by law.

PIPEDA case #2006-343 followed the same logic and stated that a landlord could provide personal information about a tenant to an insurance company, as the insurance company’s purpose for obtaining this information was reasonable.

Although it does not appear that PIPEDA applies to residential condominium corporations it would be wise, for cautions sake, to enforce privacy policies in line with PIPEDA’s principles.  This would diminish any risk of contravening the relevant sections of the Condominium Act, and would ensure compliance with PIPEDA in the event this legislation was ever found to apply to your condominium corporation.