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By Paul Russell, LegalMatters Staff • People who have been defamed may be contemplating legal action, but is it worth it? Potential plaintiffs and their legal counsel would be advised to read through a recent Manitoba court case before deciding, says Toronto defamation lawyer Howard Winkler.
“It serves as a cautionary tale for anyone considering a defamation action,” says Winkler, principal and founder of Winkler Law.
“Although the Chartier v. Bibeau decision was from the Manitoba Court of Appeal (COA), leave to appeal to the Supreme Court of Canada (SCC) was sought and denied. Apparently, the Supreme Court didn’t think there was anything materially wrong with the decision so everyone in Canada should heed its findings.”
The case involves a defendant who told two of the plaintiff’s business acquaintances that the plaintiff stole from him, according to court documents. The two acquaintances continued to do business with the plaintiff and the plaintiff admitted that he suffered no actual loss as a result of the defendant’s comments.
$500,000 award reduced to $50,000
The defamation lawsuit was heard by a civil jury, which awarded the defendant general damages of $500,000.
“Civil jury trials in Manitoba are rare,” the appeal court judgment noted, and after reviewing damage awards across the country, added “awards for defamation in that amount are virtually non-existent.”
While upholding the defamation ruling, the COA slashed the award to $50,000 for general and aggravated damages and dismissed a cross-appeal for punitive damages. The COA notes that an appeal court may intervene if damages awarded by a lower court are “so exorbitant or so grossly out of proportion to the libel as to shock the court’s conscience and sense of justice.”
“This case is another example of why potential individuals who have been defamed, need to take great care about making the decision to sue,” Winkler tells LegalMattersCanada.ca.
“This case, as well as the anti-SLAPP (strategic lawsuits against public participation) legislation that exists in Ontario and British Columbia, provides reason to pause for individuals in relation to making the decision to sue for defamation,” he says.
Award may not cover expenses
“The Manitoba decision reminds us that unless certain circumstances exist, it may not make economic sense to bring an action for defamation. The potential recovery might not be sufficient to indemnify a party for their actual out-of-pocket expenses in pursuing the litigation,” says Winkler.
“Defamation proceedings are complex and tend to be time intensive and expensive. Assuming the normal rule of partial indemnity costs, if you only recover $50,000 by way of general and aggravated damages, you are not going to come out of the process whole,” he adds.
Winkler notes that in deciding what an appropriate award of general damages would be, the Manitoba COA examined decisions in Manitoba, Alberta British Columbia, the Yukon, New Brunswick, Nova Scotia, Ontario and Saskatchewan.
“The court did quite a broad analysis of general and aggravated damage awards throughout the country, before deciding that a $50,000 general and aggravated damage award was appropriate,” he says.
Three factors to consider
Winkler says there are three key factors that plaintiffs and their lawyers should take into consideration when determining a claim’s worth.
“First, was there a significant publication of the defamatory words?” he says, explaining that in this case the defamation was only heard by two people on one occasion. “If the defamation has a limited scope, you need to think twice,” says Winkler. “If the publication is broadly disseminated or it is disseminated in the media, the situation might be different.”
The second issue is to decide if the defamation results in economic loss, he says. “If you can prove actual loss, then your chance of getting a higher award including special damages may exist,” says Winkler.
The third factor is hurt feelings, he says. “Although the court found the defamatory remarks to be serious and damaging, there doesn’t appear to have been significant evidence of hurt feelings,” says Winkler. “One of the grounds for recovery of general damages is hurt feelings. Unless you’ve got evidence of that, you should be careful about initiating an action for defamation.”
Generally speaking, he says it is appropriate to sue for defamation if the words complained of have caused economic loss or if the importance of obtaining vindication is worth the investment of unrecoverable resources.
Cost of litigation may exceed the benefits
“Sometimes vindication from the court is crucial to the plaintiff’s continued standing in their community, either in their personal lives or in their business lives,” Winkler says. “If that standing in the community has not suffered, as in this particular case, one should be cautious about bringing an action for defamation.”
“Both plaintiffs and their counsel must seriously consider whether the cost of litigation is going to outweigh the benefits that could be achieved by even successfully suing.”
While the plaintiff obtained vindication with this decision, he says it was probably not worth the expense.
“I would guess that when you take the $50,000 general and aggravated damage award, and the fact that the cost award was only on a partial indemnity basis, this case represents a financial loss to the plaintiff when you take into consideration the costs of pursuing litigation.”
