CBC wins Manitoba defamation appeal with responsible communication defence

The Manitoba Court of Appeal has overturned a $1.6 million defamation ruling against the CBC in what one lawyer says is a “dramatic affirmation” of a crucial defamation defence for journalists. 

Following a news report in which the investment advisor’s former client accused him of losing more than $300,000 of his retirement savings, Kenneth Muzik brought a defamation claim against the CBC and one of its reporters, Gosia Sawicka. Muzik was successful at trial and awarded $1.6 million in total damages.

The Manitoba Court of Appeal has allowed the CBC’s and Sawicka’s appeal. The case turned on the responsible communications defence.

As an appeal court decision overturning the result of a defamation trial with a media defendant, Muzik v Canadian Broadcasting Corporation et al, 2023 MBCA 95 was a rare case, says Andrea Gonsalves, counsel for the appellants and a partner at Stockwoods LLP.

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Responsible communication is an important and still-evolving defamation defence critical to the media’s ability to report on matters of public interest, adds Justin Safayeni, counsel for the appellant and a Stockwoods partner.

“The decision is, in a sense, an important and dramatic affirmation that the responsible communication defence serves an important purpose in Canadian defamation law,” says Safayeni. He says the ruling provides guidance on how the defence operates and how courts should approach the responsible communication analysis.

In Peter Grant, et al. v. Torstar Corporation, et al., the Supreme Court of Canada created the defence of responsible communication to modify defamation law to provide more protection for communications on matters of public interest, said Justice Marc Monnin, who wrote the reasons for the appeal court panel. Defendants can use the defence if they can show their publication of defamatory material was responsible and that they exercised diligence “in trying to verify the allegations having regard to all the circumstances.” Defendants cannot use it when they demonstrate malice toward the plaintiff.

The trial judge found that the defendants could not use the responsible communication defence because the publication was not on a matter of public interest but a “private dispute between an investor looking for compensation and a financial advisor who denied wrongdoing.” The judge said the dispute had been “dressed up” by the CBC to make it look like a matter of public interest. The defence was also unavailable because the judge found the defendants acted with malice and without due diligence.

While the trial judge concluded that the CBC’s reporting had not raised an issue of public interest, Justice Monnin cited the SCC decision in 1704604 Ontario Ltd v Pointes Protection Association, 2020 SCC 22, which called for a “generous and expansive interpretation” in its consideration. To assess public interest, the judge must examine “the context in which the expression was made and the entirety of the relevant communication” rather than the merits of the defamation allegation, manner of expression, and the motive of the author. In taking a “narrow focus of the dispute,” the trial judge committed an error of law, said Monnin.

The appeal court “reaffirmed the very broad approach that needs to be taken to what's a matter of public interest for the purposes of this defence,” says Gonsalves. “And they also took a much more contextual and robust approach, I think, to how media can investigate and report on a story through the exercise of due diligence.”

Before this case, it may have been unclear if a trial judge’s findings on whether the defamatory communication raised a matter of public interest was a pure question of law or a question of mixed fact and law, says Safayeni. The appeal court clarified that this is a question of law, which is consequential because an appellate court will review that issue on a standard of correctness rather than the higher standard of palpable and overriding error, he says.

The trial judge found that the explosive allegations – that Muzik’s financial services led to a man losing $300,000, forcing him to sell his house and come out of retirement to look for work – required a high degree of diligence, which CBC did not achieve. He said CBC did not research the investment strategy at play, did not inform the plaintiff that it would broadcast snippets of a surreptitiously recorded conversation with him, and did not obtain that full audio recording or ask why the source would not provide it. The CBC also did not include the results of The Mutual Fund Dealers Association of Canada’s (MFDA) investigation into Muzik or the MFDA’s letter indicating it would not take disciplinary action against him.

Monnin said the trial judge addressed the due diligence factors as if the story was about a dispute between the plaintiff and the CBC’s source rather than “the role the regulators had played and were continuing to exercise.” But “one of the salient facts” of the complaint against Muzik was the failure to disclose that his employers had him on “stringent supervision and controls,” said Monnin. Whether Muzik had an obligation to disclose that information to clients was the subject of the CBC’s enquiries to the Manitoba Securities Commission, and the CBC described in its evidence-in-chief that it was considering a larger story involving the relationship between the regulatory agencies involved.  

Ultimately, Monnin found that the CBC “performed a satisfactory investigation into the status and reliability of its main source” and that the trial judge made a palpable and overriding error in finding it did not. Monnin also found that the trial judge’s findings on malice mainly related to events that occurred after the publications. He said he placed too much weight on certain evidence and too much importance on matters irrelevant to whether malice existed.

Gonsalves says the trial decision was also notable because of the size of the damages award.

“Although the Court of Appeal didn't need to comment on damages at all in light of its finding that, in fact, the responsible communication defence was made out, they did make a point of commenting on the errors they found with the trial judge’s approach to damages.”

Monnin said that if he were incorrect in his finding that the responsible communication defence applies and the defendants were liable for defamation, the damages award would be reduced to $100,000.

Gonsalves says that the reduction in the damages assessment is an “important message” to courts and counsel that while damages are within the trial judge’s discretion, that discretion is “not completely untrammelled.”  Courts must pay attention to the plaintiff’s circumstances at the time of the defamatory publications, causation must be applied just as rigorously when it comes to special damages or income loss, and awards for aggravated and punitive damages are intended to be rare and must be properly supported on the record and properly justified by the trial judge, she says.