April 2017

Supreme Court of Canada Releases Judgment on Defence of Officially Induced Error

Jack D. Coop, Fogler, Rubinoff LLP1 In an oral judgment released on January 27, 2017 in the case of R. v. Bedard, the Supreme

Court of Canada confirmed the elements of the defense of officially induced error, as set out

in its 2006 decision in Lévis (City) v. Tétreault.

Elements of the Defence

It may be recalled that in Lévis, the Supreme Court repeated and adopted the six elements of

the defence of officially induced error established by it in its 1995 decision R. v. Jorgensen:

(1) that an error of law or of mixed law and fact was made; (2) that the person who committed the act considered the legal consequences of his

or her actions; (3) that the advice obtained came from an appropriate official; (4) that the advice was reasonable; (5) that the advice was erroneous; and (6) that the person relied on the advice in committing the act.2

The Supreme Court's judgment in Bedard, therefore, confirms a line of Supreme Court

authority concerning this defense which is more than 20 years old.

Use of the Defence by a Government Official

The unusual wrinkle to Bedard is that the case concerned an attempt by Quebec wildlife and

fisheries peace officers to employ the defence of officially induced error to defend

themselves from charges that they criminally assaulted the complainant, an individual whom

they were attempting to arrest for violating the Fisheries Act. The peace officers were

planning to attend at the complainant's home without a warrant to demand that he produce

identification, so they could lay charges against him under the Fisheries Act. Prior to

attending on the home, they sought out the advice of a police officer regarding what they

could do if the complainant refused to provide identification. They were told by the police

officer that they could arrest him. The peace officers argued, in their defence, that they

were officially induced (by the police officer's advice) to arrest the complainant, and in so

doing to apply the physical force which formed the basis for their assault charges.

1 Partner, Fogler, Rubinoff LLP, and LSUC Certified Specialist in Environmental Law. 2 See Lévis (City) v. Tétreault, 2006 SCC 12, [2006] 1 S.C.R. 420, at para. 26.

Toronto Law Journal April 2017 Page 2

However, the police officer's advice did not address the situation the peace officers

encountered upon attending at the home. Although they were initially invited into the

complainant's home, once they made their demand for identification (which was refused),

they were asked to leave the home. At that point, their presence in the home was illegal and

their arrest of the complainant (and the physical assault upon him) became illegal. The

Quebec Court of Appeal ruled, inter alia, that because the police officer's advice did not

address this illegal arrest situation, the peace officers failed to establish that they relied

upon the police officer's advice in making the arrest.3

In upholding the decision of the Quebec Court of Appeal, the Supreme Court first expressed

"serious reservations" about whether a government official may avail themselves of the

defence in the course of performing his or her duties. Second, the court found that the third

and fourth conditions of the defence of officially induced error could not be proven by the

peace officers:

The Chief Justice - The defence of officially induced error of law is intended to protect a diligent person who first questions a government authority about the interpretation of legislation so as to be sure to comply with it and then is prosecuted by the same government for acting in accordance with the interpretation the authority gave him or her. We have serious reservations about the very possibility of a government official raising the defence of officially induced error of law in relation to the performance of his or her duties. This being said, we all agree that the conditions under which this defence is available are not met here: see Lévis (City) v. Tétreault, 2006 SCC 12, [2006] 1 S.C.R. 420. In particular, considered objectively, the third and fourth conditions — that the advice obtained came from an appropriate official and that the advice was reasonable — are not satisfied.

Conclusion

This decision confirms the existing law on the defence of officially induced error.

Of perhaps greater interest, it is also a cautionary decision that warns government officials

(including provincial officers, peace officers and even police officers)4 that, regardless

whether this defence may be legally available to them, they would be well-advised to obtain

reasonable legal advice from an appropriate official before undertaking regulatory action in

respect of which they are legally uncertain or otherwise ignorant.

3 R. c. Bédard, 2016 QCCA 807 (Quebec Court of Appeal), at para. 21. (http://www.canlii.org/fr/qc/qcca/doc/2016/2016qcca807/2016qcca807.pdf) 4 It may be noted that even police officers, as "government officials", are subject to all manner of strict liability obligations under their respective police services laws and professional codes of conduct, which laws and codes govern the manner in which they carry out their statutory duties. See, for example, section 79 to 81 of the Ontario Police Services Act, R.S.O. 1990, c. P.15.

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Only in this way can government officials minimize the risk that their own conduct is illegal,5

or alternatively maximize the chances that a court may accept their defence of officially

induced error.

While the Supreme Court does not specify who the "appropriate official" must be (from whom

the "reasonable advice" is sought by government officials), the strong implication of this

decision is that government peace officers should be seeking legal advice from government

lawyers, and not from fellow peace officers or police officers.

5 Minimizing the risk of illegality should be important for government officials, not only for criminal and quasi-criminal reasons, as in this case. It should also be important if government officials wish to avoid civil actions for "abuse of public office" and other torts, as well as judicial review proceedings which challenge their decisions based upon principles of administrative law.

April 2017

Ledcor v. Northbridge: the Supreme Court of Canada Clarifies the "Faulty Workmanship" Exclusion

Josiah MacQuarrie, Dutton Brock LLP The Supreme Court of Canada recently released one of the more important insurance law

decisions in recent memory. In Ledcor Construction Ltd. v. Northbridge Indemnity Insurance

Co.1 the Supreme Court weighed in on the distinction between “faulty workmanship”, which

is typically excluded under a builder’s risk policy, or “resultant damage”, which is typically

covered.

Ledcor was a general contractor hired to construct the EPCOR building in Edmonton, Alberta.

As the general contractor, they hired a window cleaner to clean the exterior windows of the

building near the end of the project. The insurer, Northbridge, had issued an “all-risks”

builder’s risk policy for the project. The insuring agreement read:

1. Property Insured

(a) Property undergoing site preparation, demolition, construction,

reconstruction, fabrication, installation, erection, repair or testing (hereinafter

called the “Construction Operations”) while at the risk of the insured and while

at the location of the insured project(s), provided the value thereof is included

in the declared estimated value of construction operations;

. . . 2. Perils Insured and Territorial Limits

This policy section insures against “All Risks” of direct physical loss or damage

except as hereinafter provided.

Ledcor and the developer, Station Lands, submitted a claim to Northbridge seeking indemnity

under the policy for the $2.5 million in damage to the windows. Northbridge denied, and

relied on the faulty workmanship exclusion, which read:

4(A) Exclusions

This policy section does not insure:

1 [2016] SCJ No 37.

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(a) Any loss of use or occupancy or consequential loss of any nature

howsoever caused including penalties for non-completion of or delay in

completion of contract or non-compliance with contract conditions;

(b) The cost of making good faulty workmanship, construction materials or

design unless physical damage not otherwise excluded by this policy results, in

which event this policy shall insure such resulting damage.

The trial judge initially found in favor of Ledcor, but the decision was overturned by the

Alberta Court of Appeal. On appeal, it was held that the cleaning service was “faulty

workmanship” as defined by the policy, and that the cost to repair the windows was not

“resultant damage”, but rather the direct result of the faulty work.

The Supreme Court disagreed. In coming into their decision, the Supreme Court made two

important findings. The first was that, as a standard form insurance contract, the standard of

review that should be applied on appeal is one of correctness. This is important, because in

Sattva Capital Corp. v. Creston Moly Corp.2, the Supreme Court had said that appeals that

involve contractual interpretation require findings of fact that attract a higher standard of

review. Until Ledcor, it had been understood that appeals involving interpretation of

insurance policies were subject to a higher standard of review and, therefore, harder to

appeal. However, the Supreme Court carved out an exception to Sattva Capital where the

contract is a “standard form” contract. In those cases, the factual matrix in which the

contract arises is not as important, and the interpretation of such an insurance policy is much

closer to a pure question of law rather than a question of mixed law and fact. As a result,

when faced with the interpretation of a standard form insurance policy, the standard of

review is one of correctness. Part of the reasoning behind this is that consistency in how

standard form contracts are interpreted is important, and appeal courts must ensure that

decisions interpreting standard form contracts have precedential value.

A second important finding involved the scope of the “faulty workmanship” exclusion itself.

The Court began by looking at the broad purpose of builder’s risk insurance, as well as the

high premiums charged, which is intended to cover accidents or damage that occur during the

course of construction. The Court found that, notwithstanding the exclusion, the insurer

agreed to cover physical damage that results from faulty workmanship using language that

was clear and unambiguous. Instead, the “faulty workmanship” exclusion was meant only to

exclude the cost of redoing the faulty work. This is true even where the “resultant damage”

and “faulty work” overlap. To allow otherwise would undermine the purpose of the coverage,

which is to provide peace of mind and ensure construction projects do not grind to a halt over

disputes such as these. The result was a successful appeal by the insured.

2 [2014] 2 SCR 6 33

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This interpretation of the faulty workmanship is exclusion will have an impact beyond

builder’s risk policies. While the Court certainly relied on the specific nature of builder’s risk

coverage in its decision, the analysis of the exclusion itself has precedential value for any

case involving a policy with a similar exclusion, such as in a typical CGL policy.

Guidance on the “faulty workmanship” exclusion is very welcome. The Supreme Court of

Canada has stated clearly that the faulty workmanship exclusion pertains only to the cost of

redoing the faulty work. Damage caused by faulty workmanship, even when the damage is to

the very property where the faulty work is performed, is covered. Here, the cost of re-

cleaning the windows is excluded, while the damage caused to the windows by the faulty

work is covered.

While the interpretation of the faulty workmanship exclusion is key, the more important take

away from Ledcor may in fact be the court’s finding on the standard of review. By

establishing a standard of review of correctness for the interpretation of standard form

insurance policies, the court has effectively made it easier to appeal any decision involving

interpretation of an insurance policy. It is quite possible that Ledcor will become cited much

more frequently for this issue than for faulty workmanship.

April 2017

Doyle v. Zochem Inc.: A good example of an employer’s many overlapping duties and obligations in the workplace

Tim Lawson, McCarthy Tétrault LLP

Doyle v. Zochem Inc., 2017 ONCA 130, a recent decision of the Ontario Court of Appeal, is a

good example of how courts are supervising conduct and slapping offending employers with

multiple statutory and common law offences and claims. Employers must navigate a web of

overlapping obligations - human rights, occupational health and safety, employment

standards and common law. These obligations can converge and create liability under

separate heads of damages. The Court in Zochem found that the same conduct of the

employer served as the basis for several types of damages under a human rights statute and

under the common law. The Court went on to explain how moral damages are distinct from

human rights damages.

Facts The facts in Zochem represent a wish list for how not to treat an employee. The plaintiff

worked for the employer for nine years, and was a plant supervisor and health and safety

coordinator at the time that her employment was terminated. She was the only female

employee at the plant. Another plant maintenance manager, whom the employer considered

to be “irreplaceable”, sexually harassed the plaintiff. He made references to sexual activity,

and generally objectified her in the workplace. The manager became aware that the plaintiff

was to be terminated, and belittled her during a meeting with coworkers. Unaware of her

upcoming termination, she made a sexual harassment complaint to her employer.

The employer conducted a cursory investigation without input from the plaintiff. The plaintiff

was then terminated on a without cause basis. Her termination was described by the Court as

“cold and brusque”. The employer stated "we don't need you here anymore”, and she was

told that she was “being irresponsible” by complaining about the harasser, as his reputation

was at stake. Also, during the termination meeting, the plaintiff’s car keys were taken from

her purse and her car was brought around without her permission. The trial judge stated that

the employer had "mangled the termination process". Among other things, it recruited

employees to "dig up dirt" to discredit the plaintiff in order to justify her termination, and

created performance reviews to bootstrap the pre-existing determination to terminate her

employment.

Trial Decision The trial judge found that the plaintiff’s employment was terminated due to her gender and a

sexual harassment complaint that she made against her manager. The plaintiff was awarded

the following:

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ten months' pay in lieu of notice;

$25,000 for sexual harassment under the Human Rights Code; and

$60,000 in moral damages for the defendant's breach of its implied contractual obligation of good faith in the manner of dismissal.

Appeal: Damages Issue

The defendant appealed the moral damages award, taking the position that awarding both

moral damages (taking into consideration sexual harassment), and human rights damages (for

infringing the plaintiff’s right to be free from harassment) was double recovery.

1. Awarding both moral damages and human rights damages for sexual harassment is

not double recovery The Court dismissed the employer’s appeal on the damages award. It found that the award of

moral damages did not constitute double recovery alongside the Human Rights Code damages

for sexual harassment. The Court provided some clarity on this issue:

Human rights damages are remedial rather than punitive.

Moral damages addressed unfair or bad faith conduct that caused mental distress. In Zochem, there was a clear factual overlap in the employer’s conduct underlying these

damage awards; very similar but perhaps not identical. The Court found no basis for reducing

the moral damages because of the overlap.

2. Factors considered for awarding moral damages The Court also commented that moral damages depend on the facts, but certain principles

emerge:

A significant factor in a moral damages award is evidence of untruthful, misleading and unduly insensitive conduct by the employer. For example, the employer in Zochem misrepresented to the plaintiff that her job was secure and that she would be given a chance to improve. This, coupled with the employer’s sudden termination of the plaintiff’s employment, and the further representation that her services were no longer needed, were not improper considerations by the trial judge in the context of the case.

It is not just conduct at the moment of termination that may be considered for moral damages, but also pre- and post- termination conduct. Because the termination decision had already been made, the employer’s cursory investigation was a proper consideration for moral damages.

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A breach of the obligation to treat employees with good faith could lead to moral damages. The Court held that the employer's denial of short term disability benefits without adequate evidence was a breach of its good faith obligation.

Take Aways from Zochem

The two key points from Zochem are:

(1) An employer’s conduct may justify an award for both human rights damages and moral damages based on the same conduct – the two remedies do not amount to double recovery.

(2) Both pre- and post- employment conduct by an employer can be considered as factors in an award for moral damages so long as such conduct is related to the manner of dismissal.

The implications of Zochem may be even broader. Although not addressed by the Court of

Appeal, the logic of the case likely applies equally to other statutory liabilities of employers,

such as under the the Ontario Occupational Health and Safety Act (“OHSA”). In particular,

the employer’s cursory investigation into the plaintiff’s complaint of sexual harassment may

well also raise issues under the OHSA, which bolster employee protection from workplace

harassment. As of September 8, 2016 employers are required to:

Review (and if necessary, amend) their workplace harassment policy to ensure it includes

workplace sexual harassment;

Promptly investigate incidents and complaints of workplace harassment;

Inform the parties to a workplace harassment complaint of the results of the investigation and any corrective action that will occur; and

Involve the Joint Health and Safety Committee in developing written programs and procedures, regarding workplace harassment.

These OHSA employer obligations, and attendant liabilities that can flow from failing to

comply with the OHSA, are in addition to all the existing other statutory and common law

obligations. And what we know from Zochem is they can all be triggered by the same

workplace fact pattern, and yield separate claims of relief which we might have once called

double recovery.

April 2017

Suing for Defamation – A Call for Restraint

By Howard Winkler, Winkler Dispute Resolution * The law of Defamation continues to be one of the most technical areas of law, with special

limitation periods, notice pre-conditions to the commencement of proceedings, special rules

of pleading and evidence, and reverse onuses of proof. It is an area of law that requires great

expertise and more importantly experience. A lawyer who provides advice and proceeds

with a claim based solely on a review of the relevant legislation may do a great disservice to

his or her client.

Absent the existence of special damages, defamation actions should rarely be brought for

monetary reasons alone. It is an unfortunate reality for plaintiffs with legitimate claims that

the unreimbursed costs of the litigation may well exceed both the damages and a partial

indemnity costs award. After a careful consideration of the monetary pitfalls of proceeding

with an action, experienced lawyers will often advise clients to proceed only where there is a

compelling need to prevent further reputational harm or achieve judicial vindication of a

harmed reputation.

An effective strategy to redress a perceived attack on reputation requires more than a legal

analysis: It requires a risk/benefit analysis that extends beyond the consideration of only the

prospects of success or the financial risks. A client’s decision to proceed with an action for

defamation is difficult and comes with often unanticipated risks: An ill-conceived defamation

action may, in fact, risk causing more harm to the client. This is particularly the case where a

client may face further negative media exposure through the reporting of court proceedings.

In this scenario, the decision to proceed with a claim may very well result in the self-

infliction of new harm to the client’s reputation and greater financial loss. Sometimes an

alternative strategy is the most prudent and least damaging course of action.

The relatively recent enactment of the Protection of Public Participation Act, 2015

(“PPPA”),1 adds another layer of risk to consider when proceeding with a defamation claim.

The Act added sections 137.1 to 137.5 to the Courts of Justice Act (“CJA”),2 providing, among

other things, a fast-track mechanism for the Court to dismiss a proceeding on a motion by a

defendant where the Court is satisfied that the proceeding arises from an expression that

relates to a matter of public interest.

Section 137.1 confers a broad scope of protection on expression, regardless of whether the

expression is communicated in “public” or “private” and contains no restriction on the class

of defendant who may seek a remedy.3 Further, the term “a matter of public interest” is

1 Protection of Public Participation Act, 2015, S.O. 2015, c. 23 2 Courts of Justice Act, RSO 1990, c C.43 [CJA] 3 Ibid. ss. 137.1(2)

Toronto Law Journal April 2017 Page 2

similarly broad in scope and likely to capture a wide range of expression.4 The PPPA also

amends the Libel and Slander Act5 to extend the application of the defence of qualified

privilege.

Significantly, subsection 137.1(7) of the CJA provides that if a judge dismisses an action under

s. 137.1, then the moving party is prima facie entitled to costs of both the motion and the

proceeding on a full indemnity basis. While there is discretion given to the judge not to

award the full indemnity costs to the moving party, the financial risk for the plaintiff is very

real and must not be ignored.

It is crucial when drafting a pleading that a lawyer has the requisite expertise in defamation

law. The jurisprudence is replete with defamation claims being struck at the pleadings stage.

Courts have struck defamation claims on, among others, the following grounds:

A notice of libel was not delivered in time.6

A notice of libel was not properly served on all proposed defendants.

A notice of libel did not provide enough clear information to the defendants for an appropriate response to be considered and taken.7

No government body may sue in defamation.8

Groups have no claim for defamation where no individual member of the group is singled out and individuals in the group have not set out the full particulars of their individual causes of action.9

The plaintiff was not sufficiently identified or identifiable in the words complained of.10

The words complained of, when read in their entire context, are not capable of bearing a defamatory meaning.11

Statements made during the course of court proceedings are subject to an absolute immunity and this immunity extends to a report which formed the basis of the witness’ evidence.12

4 See Grant v. Torstar Corp., [2009] 3 SCR 640, 2009 SCC 61 (CanLII) 5 Libel and Slander Act, RSO 1990, c L.12, s. 25. 6 See Siddiqui v. Canadian Broadcasting Corporation, 2000 CanLII 16920 (ON CA) [Siddiqui]; Supreme Auto Group Inc. v. Toronto (Police Services Board), 2010 ONSC 3803 (CanLII) [Supreme Auto] 7 See Siddiqui, ibid. 8 See Halton Hills (Town) v. Kerouac, 2006 CanLII 12970 (ON SC) 9 See Elliott v. Canadian Broadcasting Corp., 1995 CanLII 244 (ON CA) 10 See Supreme Auto, supra. 11 See Supreme Auto, supra 12 Fabian v. Margulies, 1985 CanLII 2063 (ON CA)

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In deciding whether to sue for defamation, a prospective plaintiff, with the assistance of his

or her lawyer, should consider, among other things, the following:

Have special damages been suffered to such an extent that the need to recover the loss outweighs the financial and reputational risks of proceeding?

Is the plaintiff truly identified or identifiable from the words published? If not, there is a risk that the plaintiff will self-identify by bringing proceedings and cause reputational harm that might not otherwise have arisen.

Has the reputation of the plaintiff in the community been so irreparably damaged and has the plaintiff been so subjected to ridicule, hatred and contempt that only the vindication resulting from a favorable court judgment will address the damage?

How prominent is the publication? If the publication of the defamatory statements appears on the Internet, then consider whether the website or blog has a large viewership. Also, consider whether the plaintiff’s name in relation to the defamation appears on a Google search beyond the first couple of pages of a search result. If not, then is the publication going to be seen by members of the community and cause reputational damage of any lasting impact or at all?

Is the plaintiff being overly sensitive to the publication of the words? It is critical to consider whether a client’s perception of the meaning of the subject words differs from what an ordinary reader would conclude.

If the defamatory statement is made to a small group, then consider whether the maker of the statement is really only “preaching to the converted”. Before proceeding with a claim, it is important to consider how much harm has in fact been done to the client’s reputation.

Will the bringing of legal proceedings simply further engage an adversary, who rather than cease in the offending conduct, will simply amplify their attack. Some people have an axe to grind and will persist in their defamatory conduct even in the face of legal proceedings. As a result, a client’s time and resources in redressing the continued attacks may be significantly depleted. In circumstances involving an unrepentant defendant, clients should be prepared for a battle.

Will the bringing of proceedings bring the offending statement into the public domain where the dispute and the alleged defamation will be able to be reported on by mass media with immunity? This relates to the earlier consideration about a plaintiff’s “self-infliction” of harm. Sometimes the best course of action is to keep one’s head down and let the publication slip into oblivion, particularly where the scope of the publication is restricted.

Relatedly, has the harm caused by the defamation subsided or been mitigated or is it likely to become mitigated over time? It is important for lawyers to advise clients that it may take the action several years to come to trial at which point the wounds of the defamation may have healed, only to be reopened by the public trial process.

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If the statement complained of is in relation to a matter of public interest will it be caught by the provisions of the Protection of Public Participation Act? A lawyer must counsel his or her client that the legislation may result in a summary dismissal even if the statement complained of is, in fact, defamatory and the action has some merit.

As alternatives, prospective plaintiffs and their lawyers should consider, among other things,

the following:

If the offending statement was published in print or on a website with a consistent readership, then consider a letter to the editor setting out the client’s position and response. Most responsible media will readily publish opposing views for the consideration of their readership.

If the offending statement appears on a Google search, then investigate whether it can be pushed down in priority with both effective Search Engine Optimization (“SEO”) and the publication of fresh positive content. A word of warning here. SEO is both a science and an art. There are many service providers who will promise the moon and after great expense will achieve no meaningful results.

Lawyers should counsel clients to seek the publication of an apology, retraction or clarification. These must be carefully and skillfully drafted to balance the need for vindication against the risk of republishing the defamation, which may inflict greater harm. Also, consideration must be given to what the other party is likely to accept. Requesting an apology that has no hope of being accepted simply serves to waste time and money.

If the subject of the defamation is a public figure or the issue raised is one of public interest, then a strategic press release should be considered for mass distribution. PR firms should always be engaged in conjunction with legal counsel. The last thing a client needs is to create liability by carelessly shifting blame to another party, who may then sue the client for defamation. An effective press release will ideally be published to the same audience to whom the original defamation was directed.

If an action has already been commenced, then a lawyer should propose an early mediation. Early mediation may provide an effective mechanism for executing an exit strategy which may serve all parties’ interests. In order to capitalize on the effectiveness of mediation, a lawyer would be wise to choose a mediator who has expertise in defamation law, who will be sensitive to the respective interests of the parties and who can provide an authoritative reality check for the parties.

Consider using the simplified procedure rules, which permit a claim for damages in the $25,000 to $100,000 range. Restricted discovery and summary trial provisions in the simplified procedure rules may result in a less costly and more timely disposition of an action.13

Consider bringing any action in the Small Claims Court where matters are disposed of with less cost and delay: Damages of up to $25,000 may be awarded and vindication may still be achieved through the Judgment of the Court. Nonetheless, in terms of

13 See Rules of Civil Procedure, RRO 1990, Reg 194, Rule 76.04 and Rule 76.10.

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vindication for the plaintiff, there remains a perception that a Small Claim Court win does not carry the same weight as a Superior Court win.

Counsel and parties should be assessing the wisdom of litigation on an ongoing basis, in particular, after delivery of the defence, the delivery of a section 137.1 CJA motion, and production of documents and discoveries. Defendants are often willing to avoid the cost of ongoing litigation and the potential exposure, through a without costs dismissal of a proceeding.

Lawyers have a professional obligation to not only advise clients on the legal merits of a

proposed action but must also advise clients on the benefits and risks of proceeding with a

claim, especially as they relate to the management of the client’s overall reputation and

financial interests. Often, in the heat of the moment and when the wounds of insult are the

deepest, it will fall to lawyers to protect the best interests of their clients by considering

restraint or alternatives to an all-out war.

*Howard Winkler is a Toronto lawyer who specialize in the law of defamation and reputation management. Mr. Winkler is regularly selected by counsel practicing in the area to mediate defamation disputes.