Court of Appeal of Quebec

Ville de Ste-Marthe-sur-le-Lac c. Experts-Conseils RB inc.

March 10, 2017

500-09-025597-154

Giroux, Schrager, Parent

Appeal from a judgment of the Superior Court granting the respondent’s motion to institute proceedings and dismissing the appellant city’s action in warranty. Allowed in part.

In 1996, the appellant retained the services of the respondent, an engineering firm, to build a new sewer system on its territory. In November of 1999, the appellant stopped paying the respondent’s professional fees, requiring the latter to bring an action on account. In its defence and counterclaim, the appellant alleged its co-contracting party’s fraud and breach of trust. At the same time, it publicized the dispute by issuing a press release on various websites. On January 7, 2002, the respondent brought an action in defamation against the appellant. On December 10, 2003, the appellant’s municipal council resolved to pay the respondent the professional fees it was claiming under the construction contract. A few days later, the new mayor sent the respondent a letter of apology, in which she stated that the allegations made against it were unfounded and defamatory. A press release to this effect was also published. The trial judge ordered the appellant to pay moral ($50,000), material ($1,800,000) and punitive ($30,000) damages. The appellant appeals.

While the appellant tried to put the blame for choosing wrongful words on its counsel, there is ample evidence of its representatives’ active involvement in the drafting of the defence and counterclaim. The fact that the appellant broadcast the content of the defence and counterclaim publically to tarnish the respondent’s reputation through a communications agency, without its counsel’s involvement, cannot be ignored. As for the moral damages awarded to the respondent, it is true that the amount of $50,000 exceeds the usual range of $10,000 to $25,000 awarded to legal persons whose right to reputation has been infringed. The elements listed by the trial judge to show that such amounts were insufficient in this case, however, have merit. Moreover, she did not commit a palpable error in taking into account the existence of the appellant’s apology and finding that it did not justify a reduction in moral damages. Since it was not a company that was about to be sold, the respondent’s fair market value before the defamation ($1,800,000) cannot be accepted, as this amount does not represent the direct consequence of the fault, that is, the profit of which it was deprived because of the defamation. Comparing the average income for the years preceding the defamation provides an indication of the profits that it should have made in the years that followed it. Taking into account the fact that the appellant apologized in 2003 and that the respondent had the obligation to minimize its loss, the Court will only consider the years subsequent to 2004 to assess the prejudice suffered as a result of the defamation. Consequently, the appeal is allowed to substitute the amount of $889,119 for the amount of $1.8 million. Also, the expert fees of $55,656 will be reduced by half. Finally, the judge did not err in granting punitive damages intended to deter other municipalities from making defamatory comments and damaging the reputation of an engineering firm without evidence. Moreover, indifference in the face of conduct likely to injure the reputation of another must be considered unlawful interference within the meaning of section 49 of the Charter of human rights and freedoms (CQLR, c. C-12). 

 *Summary by SOQUIJ
Text of the decision: Http://citoyens.soquij.qc.ca. This link open an external website in a new window.

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