Supreme Court of Canada
Davies & Davies Ltd. v. Kott, [1979] 2 S.C.R. 686
Date: 1979-05-22
Davies & Davies Limited (Plaintiff) Appellant;
and
Bernard Kott (Defendant) Respondent.
1979: February 14; 1979: May 22.
Present: Laskin C.J. and Ritchie, Pigeon, Dickson and Mclntyre JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Libel—Qualified privilege—Malice—Libel based on letters—Letters capable of conveying defamatory meaning—Letters written on occasion of qualified privilege—Whether trial judge justified in putting the issue of malice before the jury.
The appeal is from a unanimous judgment of the Ontario Court of Appeal which allowed an appeal from a judgment in the amount of $4,000 in a libel action against Kott. Both the libel action and another action involving the discharge of a mortgage arose from the same events between the same parties but the trial was complicated by the fact that the former was tried with a jury and the latter by the judge alone.
During the spring of 1962 Kott who had been solicitor to the appellant company since 1961 entered an oral agreement that the company would build a house for Kott and his wife. Kott seemingly was to purchase the land, pay the actual cost of construction, plus a profit of $2,500 and to render legal services to the company at a fair and reasonable charge. Kott procured the land and a first mortgage from an insurance company and the house was constructed. The cost however greatly exceeded the estimates and in January 1963 Kott owed the appellant company approximately $18,000 to complete payment for the house. A second mortgage in that amount was executed on January 31, 1963. The principal amount was due on December 31, 1963, but when that date arrived Kott was unable to meet the payment of $17,356.66 which was the amount required as notified by Davies to Kott. The matter was settled by the delivery of a cheque for $2,356.66 by Kott to Davies and by the execution and delivery by the Kotts to Davies of a new mortgage for $15,000. The earlier mortgage was not returned to Kott despite his request for it and it was agreed that the $15,000 mortgage would not be registered.
Subsequently relations between the parties deteriorated despite the apparent settlement of their affairs. Kott
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continued to act as Davies’ solicitor however, despite differences on various matters including the building of the house and payment therefor. Later, after Kott was requested to sign an acknowledgment in respect of the balance due on the $15,000 mortgage which he refused to do, he again requested return of the $18,000 mortgage. The response to his request was a letter from other solicitors advising that they had registered a caution with respect to the $18,000 charge.
The libel action was brought as a result of letters written by Kott on March 30, 1965 to Somers (the Davies’ solicitor) and to Mador (the solicitor who had requested Kott’s signature on the acknowledgment) which emphasised that the $18,000 charge had been reduced to and replaced by the $15,000 charge, by then registered, and suggesting that the action to register the former was in essence a fraud. Subsequent to this date Kott made substantial payments on the $15,000 mortgage which Davies had given Kott good reason to believe were credited against that mortgage. Kott finally arranged to pay it off. When Kott realised that Davies had applied the payments against the $18,000 mortgage and was advised by Davies that more than $14,000 would be required to clear the $15,000 mortgage he commenced the mortgage action. On February 18, 1969, some four years after the publication of the letters Davies commenced the libel action.
The trial judge found the letters capable of conveying a defamatory meaning, that they were written on occasion of qualified privilege and that there was some evidence of malice which he left to the jury. The Court of Appeal however concluded that there was no evidence to justify the question of malice being put to the jury.
Held: The appeal should be dismissed.
The relationship between a judge and a jury in dealing with issues of fact is generally well established. Ordinarily the judge is not concerned with the weight of evidence. If he concludes that there has been adduced admissible evidence going in proof of the fact in issue he must leave it to the jury but it is the jury that has the function of weighing the evidence and according to it the effect that it (the jury) considers appropriate.
However where, as in this case, words are spoken or written on an occasion of qualified privilege the question of malice should not be put to the jury unless the trial judge is of the opinion that the evidence adduced raises
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a probability of its existence. This view, well rooted in authority, rests upon the proposition that the privilege of which the defendant has the benefit creates a presumption against malice.
Adam v. Ward, [1917] A.C. 309; Holliday v. McKim Advertising Limited, unreported, Ontario Court of Appeal; Spill v. Maule (1869), L.R. 4 Ex. 232; Somerville v. Hawkins (1851), 10 C.B. 583; Sun Life Assurance Company of Canada et al. v. Dairymple, [1965] S.C.R. 302; Taylor et ai v. Despard et al. [1956] O.R. 963; Turner v. M-G-M Pictures Ltd., [1950] 1 All E.R. 449; Horrocks v. Lowe, [1975] A.C. 135 referred to.
APPEAL from a judgment of the Court of Appeal for Ontario allowing an appeal from a judgment of the High Court awarding $4,000 damages against the respondent Kott. Appeal dismissed.
R. N. Starr, Q.C., for the appellant.
Warren H. O. Mueller, for the respondent.
The judgment of the Court was delivered by
MCINTYRE J.—This is an appeal from a unanimous judgment of the Ontario Court of Appeal which allowed an appeal from a judgment of the High Court which awarded damages in the amount of $4,000 against the respondent Kott.
At trial and in the Court of Appeal this action, which will be referred to as the libel action, was heard together with another action which will be called the mortgage action. The two actions arose out of the same events between the same parties but the trial before Pennell J. was complicated by the fact that the libel action was conducted before a jury while the mortgage action was before the judge alone.
In the mortgage action, the respondent Kott sought certain declarations that he had paid and discharged two mortgages on real property in favour of the corporate appellant. The questions involved in that action are not before the court upon this appeal but the long and careful judgment of the trial judge in which he granted the two declarations sought by Kott is most helpful in gaining an understanding of the facts which sur-
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round both actions and the somewhat complicated transactions between the parties. In his reasons for judgment, the trial judge found in Kott’s favour on all significant matters of fact. These findings were abundantly supported in the evidence and in making factual references in the reasons which follow I have accepted them.
At all relevant times, the respondent Kott was a solicitor and the appellant Davies & Davies Limited was a company engaged in construction. One George Ross Davies, hereafter referred to as Davies, was the principal shareholder and manager of the company’s affairs. Kott, in his dealings with the company, dealt with Davies personally and it is evident that the parties treated the actions and statements of Davies as the actions and statements of the company. During the spring of 1962 Kott, who had been acting as solicitor for the company since 1961, entered into an oral agreement with Davies which provided that the company would build a house for Kott and his wife. Kott agreed to purchase the land, pay the actual cost of construction plus a profit of $2,500, and to render legal services to the company at a fair and reasonable charge. Kott procured the land and a first mortgage from an insurance company and the house was constructed by the Davies company.
The cost exceeded the estimates by a substantial amount and in January of 1963 Kott found himself owing a sum in the region of $18,000 to Davies to complete payment for the house. He executed a mortgage upon the property in that amount second to the insurance company mortgage on January 31, 1963. The principal amount was due on December 31, 1963. When that date arrived, Kott was unable to meet the payment.
To meet his obligation on December 31, 1963, Kott would have been required to pay Davies $17,356.66. This was the amount required by Davies and of which he notified Kott in December of 1963. The matter was settled by the delivery of a cheque for $2,356.66 by Kott to Davies and by the execution and delivery to Davies by Kott and his wife of a new mortgage for $15,000 covering the real property. The result of these transactions, as found by the trial judge in the mortgage action,
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was that the $18,000 mortgage which by agreement had not been registered was retired. The mortgage was not returned to Kott despite his request for it. It was also agreed that the $15,000 mortgage would not be registered.
Relations between Kott and Davies deteriorated despite the apparent settlement of their affairs. Kott continued to perform legal services for Davies but the correspondence between them indicates differences on various matters including the question of the building of the house and payment therefor.
In March 1965, Kott received a letter dated March 16 from a solicitor named Mador in these terms:
Dear Sir:
Please be advised that I have arranged to purchase on behalf of my clients the second mortgage held by Davies & Davies Limited on your home. In order to complete this transaction I would respectfully request the within acknowledgment to be signed by you and your wife.
Yours very truly,
‘Harold Mador’
There was at that time a balance owing on the $15,000 mortgage of $14,980 together with interest at 12 per cent per annum. Kott informed Mador by telephone that he would not sign the acknowledgment. Mador replied in writing that if the acknowledgment was not received he would apply to the court for an order. On March 22, 1965, as found by the trial judge, Kott wrote to Davies reciting the history of the transactions between them and demanding the return of the $18,000 mortgage. Kott then received a letter from solicitors acting for Davies dated March 26, 1965, in these terms:
Re: Davies and Davies Limited
Charges to Kott
Please be advised that we have been retained to act in the above noted matter.
With respect to the $18,000.00 Charge executed by you and your wife, in favour of Davies and Davies Limited, we have registered a caution No. A161285 at the Land Titles Office today, and I hereby notify you of the same.
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Please direct all future correspondence concerning these mortgages to the attention of this writer, as both Mr. and Mrs. Davies have given me explicit instructions in this matter.
The receipt of this letter provoked two letters written by Kott which form the basis of the libel action. One letter, written to the solicitor Mador on March 30, 1965, contained an explanation of his dealings with Davies and also included these words:
Immediately upon receipt of this letter, I telephoned Mr. Somers who informed me that he was aware that this $18,000.00 Charge was reduced to and replaced by the presently registered $15,000.00 Charge but that nevertheless his clients asked him to register the $18,000.00 Charge but was apparently unable to do so by virtue of some alleged defect in the Charge and instead registered the above Caution.
I have today sent a letter to Mr. Somers advising him that his client or clients had no legal right to even attempt to register the Charge or register the Caution and that in trying to register the Charge an attempt was made, in my opinion, to commit a fraud on my wife and myself and further in my opinion a fraud was committed by the registration of the Caution. You must agree that I cannot sign the acknowledgment under the above circumstances. I therefore hope that these matters can be cleared up very quickly so that I may comply with your request to sign the acknowledgment subject to any adjustments.
Yours very truly,
The other letter written on March 30, 1965, to Davies’ solicitors repudiated any suggestion that Davies had any right to register the $18,000 mortgage or the Caution in respect of it and went on to say:
This is therefore to advise you that unless your client removes the Caution registered against our property, within 10 days from the date hereof, legal action will be instuted to remove the said Caution. It is my opinion that the attempt by your client to register a defunct mortgage (having been replaced by a smaller and registered mortgage) and indeed retaining it after oral and written demands for its return together with other documents, was an attempt by your client to commit a fraud on my wife and myself. And it is also my opinion that the registration of the Caution was a deliberate and carefully calculated fraud committed by your client.
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Once again I request the return of all documents pertaining to the house and especially the $18,000.00 Charge and the Transfer.
Yours very truly,
Davies admitted receiving the letter of March 30, 1965, in the month of April 1965. He did not deny any of the statements made in it.
Relations between the parties continued to deteriorate but Kott made substantial payments on the $15,000 mortgage and finally arranged to pay it off. Davies, however, applied funds paid by Kott in respect of the $15,000 mortgage against the $18,000 mortgage and when Kott attempted to procure a discharge of the $15,000 mortgage he was informed by Davies that he would be required to pay a sum in excess of $14,000 to discharge his obligation on the $15,000 mortgage. It is clear from the evidence that Davies had given Kott good reason to believe that the payments he had made on the $15,000 mortgage were credited against the liability under that mortgage and, as the trial judge found in the mortgage action, the appropriation of funds to the $18,000 mortgage was improper. It can be readily understood that Kott was angered at this development. On February 26, 1968, shortly after receiving Davies’ letter advising of his continuing obligation in respect of the $15,000 mortgage, Kott commenced the mortgage action. On February 18, 1969, Davies commenced the libel action, some four years after the publication of the letters.
The trial judge found the letters were capable of conveying a defamatory meaning and that they were written on occasions of qualified privilege. He said:
I understand the law to be as stated by Lord Atkinson in Adam v. Ward, [1917] A.C. 309 at p. 334:
A privileged occasion is...an occasion when the person who makes a communication has an interest or a duty, legal, social or moral, to make it to the person to whom it is made, and the person to whom it is so made has a corresponding interest or duty to receive it. This reciprocity is essential.
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He was of the opinion that there was some evidence of malice and he left that question to the jury. He further said:
I should not try excess of language in too nice scales, but I think that the language used by the defendant, together with the extrinsic evidence, was some evidence to go to the jury. This being my respectful opinion it is not for me to weigh the evidence. It was for the jury to decide whether they were satisfied that in publishing the libels the defendant was in fact giving effect to his malicious or unwarrantable feelings toward the plaintiff and was not merely using the occasion for the protection of the interests of himself and his wife. The jury have made a finding of express malice.
In the Ontario Court of Appeal, no complaint was made of the charge to the jury. Estey, C.J.O., (as he then was) speaking for the court relied upon an unreported decision of that court, Holliday v. McKim Advertising Limited et al., wherein it had been held that the question of malice should not be put to the jury unless the trial judge considered that there was evidence raising a probability of malice. He then reviewed the evidence and concluded that there was no such evidence justifying submission of the question to the jury. Accordingly the appeal was allowed.
The only argument of significance raised before this Court concerned the test to be applied by a trial judge in deciding whether the question of express malice should be left to the jury. The question confronting the Court may be stated in this way:
(1) Must a trial judge, where libellous words have been published on an occasion of qualified privilege, leave the question of the existence of express malice to the jury without weighing the evidence adduced when there is, in his view, some evidence of express malice? or
(2) Is the trial judge obligated to put the question of express malice to the jury only where, in his view, there is sufficient evidence to raise a probability of the existence of malice?
The relationship between a judge and a jury in dealing with issues of fact is generally clear and
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well established. Ordinarily a judge sitting with a jury is not concerned with the weight of evidence. If he concludes that there has been adduced admissible evidence going in proof of the fact in issue, he must leave it to the jury. It is then the function of the jury upon weighing the evidence to accord it such effect as it may consider appropriate. This rule while one of general utility must be modified in a case of this kind. Where words are spoken on occasion of qualified privilege, the question of malice should not be put to the jury unless the trial judge is of the opinion that the evidence adduced raises a probability of its existence.
This view is well rooted in authority in England, Canada and other Commonwealth jurisdictions. It rests upon the proposition that the privilege of which the defendant has the benefit creates a presumption against malice. In this context, the word “malice” is used to connote malice in fact, actual malice, or express malice which goes beyond the malice ordinarily presumed upon the mere publication of libellous words. More than a mere possibility of malice must therefore be shown to override the privilege upon which it has been said rests the protection of many honest transactions in the daily conduct of human affairs. By according the privilege, the law recognizes the need to enable the defendant to protect his legitimate interests. He is, in this respect, in a preferred position vis-à-vis the plaintiff where the privilege exists. For this reason the question of the existence of express malice, which alone would destroy the privilege, should not be left to the jury unless a probable case is made for it. The presumption would be meaningless if the merest scintilla of evidence would suffice to displace it. From very early times, in cases such as Spill v. Maule[1], and Somerville v. Hawkins[2], this proposition has been stated. In the Somerville case, one which is frequently cited, Wilde C.J. said at p. 590:
We think, therefore, the communication in question was privileged, i.e., it was made under circumstances which rebut the presumption of malice, which would otherwise arise from the nature of the words used. That presumption being rebutted, it was for the plaintiff to
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show affirmatively that the words were spoken maliciously; for, the question, being one the affirmative of which lies on the plaintiff, must, in the absence of evidence, be determined in favour of the defendant.
And later on the same page:
It is certainly not necessary, in order to enable a plaintiff to have the question of malice submitted to the jury, that the evidence should be such as necessarily leads to the conclusion that malice existed, or that it should be inconsistent with the non-existence of malice; but it is necessary that the evidence should raise a probability of malice, and be more consistent with its existence than with its non-existence.
This principle is succinctly stated in Gatley on Libel and Slander, 7th ed., p. 342, para. 791, and more significantly the question was recently dealt with in this Court in Sun Life Assurance Company of Canada et al. v. Dalrymple[3], where Spence J., speaking for himself, Cartwright, Martland and Ritchie JJ., said at pp. 309-310:
Firstly, it must be determined what evidence of malice is sufficient to go to the jury. Whether the defendant was actuated by malice is, of course, a question of fact for the jury but whether there is any evidence of malice fit to be left to the jury is a question of law for the judge to determine: Gatley, op.cit. p. 272; Adam v. Ward, supra, per Lord Finlay L.C. at p. 318:
Roach J.A. in Taylor et al. v. Despard et al., [1956] O.R. 963, at p. 978 said:
The law is well settled that in order to enable a plaintiff to have the question of malice submitted to the jury—and I am of course dealing only with occasions of qualified privilege—it is necessary that the evidence should raise a probability of malice and be more consistent with its existence than with its nonexistence and that there must be more than a mere scintilla of evidence.
This would seem to be supported by other authorities.
In Turner v. M-G-M Pictures, Ltd., [1950] 1 All E.R. 449, Lord Oaksey said at p. 470:
Did the appellant prove that it was more probable than not that the respondents were actuated by malice?
And Lord Porter said at p. 455:
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No doubt, the evidence must be more consistent with malice than with an honest mind, but this does not mean that all the evidence adduced of malice towards the plaintiff on the part of the defendant must be set against such evidence of a favourable attitude towards him as has been given and the question left to, or withdrawn from, the jury by ascertaining which way the scale is tipped when they are weighed in the balance one against the other. On the contrary, each piece of evidence must be regarded separately, and, even if there is a number of instances where a favourable attitude is shown, one case tending to establish malice would be sufficient evidence on which a jury could find for the plaintiff.
Counsel argued that the trial judge, and later the Court of Appeal, was under an obligation to examine all the evidence of malice, both intrinsic, to be found in the words used, and extrinsic, to be found in the surrounding circumstances. He argued on the basis of Lord Porter’s words from the Turner v. M.G.M. case, cited, supra, by Spence J. in the Sun Life case that each piece of evidence must be considered separately because one piece of evidence tending to show malice could be sufficient. Reference was made to the words of Spence J. in the Sun Life case at p. 310 where he said:
Moreover, as Lord Porter pointed out in the judgment quoted and adopted by Cartwright J. in Jerome v. Anderson, supra, at p. 299, one piece of evidence tending to establish malice is sufficient evidence on which a jury could find for the plaintiff and therefore if more than a mere scintilla, it should be submitted to the jury for its finding of fact.
I cannot accept the argument that the Court of Appeal did not review the evidence in detail. While I accept as correct Lord Porter’s words referred to above and those of Spence J. last quoted, they do not mean that one piece of evidence of whatever weight may be sufficient to overcome the presumption against malice raised by the privilege. One piece of evidence may be sufficient provided that it is by itself of sufficient weight to raise a probability of the existence of malice.
A review of the evidence in this case led the trial judge to conclude that there was some evidence of
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malice. As I have said, in this he was applying the wrong test. The question for his determination was whether there was sufficient evidence to raise a probability of malice. I agree with the Court of Appeal in its findings that no such evidence did exist. It must be remembered that the letters complained of were written by Kott in the asserted belief that they were true and after he had concluded that Davies was acting; in breach of his contract and threatening the investment that Kott and his wife had built up in the house. I am unable to say that there is anything in what he wrote which could go beyond mere excess of language and which could amount to such evidence of malice that it should have been left to the jury. Words published in these circumstances must not be weighed too delicately in considering the intent and motives of the writer. Lord Atkinson in Adam v. Ward, supra, said at p. 339:
…a person making a communication on a privileged occasion is not restricted to the use of such language merely as is reasonably necessary to protect the interest or discharge the duty which is the foundation of his privilege; but that, on the contrary, he will be protected, even though his language should be violent or excessively strong, if, having regard to all the circumstances of the case, he might have honestly and on reasonable grounds believed that what he wrote or said was true and necessary for the purpose of his vindication, though in fact it was not so.
Kott pleaded and asserted an honest belief in the truth of what he wrote in the letters complained of. He was surely entitled to warn the solicitor Mador that he and Davies were in conflict and to thus take an early step toward self-protection. He was certainly entitled to put his position, later found supportable by the trial judge in the mortgage action, to Davies and if fraud was a hard word to use in each situation it appears that it was not far off the mark and on the whole of the evidence, even though a justification was not pleaded, it is reasonable to accept Kott’s assertion of honest belief. This is a vital point in Kott’s favour. See Horrocks v. Lowe[4], and particularly Lord Diplock, pp. 149-150:
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The motive with which a person published defamatory matter can only be inferred from what he did or said or knew. If it be proved that he did not believe that what he published was true this is generally conclusive evidence of express malice, for no sense of duty or desire to protect his own legitimate interests can justify a man in telling deliberate and injurious falsehoods about another, save in the exceptional case where a person may be under a duty to pass on, without endorsing, defamatory reports made by some other person.
Apart from those exceptional cases, what is required on the part of the defamer to entitle him to the protection of the privilege is positive belief in the truth of what he published or, as it is generally though tautologously termed, “honest belief”.
Lord Diplock continued at p. 151:
Qualified privilege would be illusory, and the public interest that it is meant to serve defeated, if the protection which it affords were lost merely because a person, although acting in compliance with a duty or in protection of a legitimate interest, disliked the person whom he defamed or was indignant at what he believed to be that person’s conduct and welcomed the opportunity of exposing it. It is only where his desire to comply with the relevant duty or to protect the relevant interest plays no significant part in his motives for publishing what he believes to be true that “express malice” can properly be found.
I can reach no other conclusion on the evidence than that Kott in writing as he did was actuated by a desire, indeed a determination, to protect the interest which he and his wife had acquired in the house. I agree with the Court of Appeal that on the proper test there was no sufficient evidence to go to the jury on the issue of express malice.
For these reasons, I am of the opinion that the appeal should be dismissed with costs.
Appeal dismissed with costs.
Solicitors for the appellant: Outerbridge, Manning & Mueller, Toronto.
Solicitor for the respondent: M.M. Orkin, Toronto.