Supreme Court

SUPREME COURT OF NOVA SCOTIA

Citation: Nichol v. Royal Canadian Legion, Branch 138 Ashby, 2011 NSSC 144

Date: 20110412

Docket: Syd. No. 284735

Registry: Sydney

Between:

Henry Nichol

Plaintiff

v.

Royal Canadian Legion, Branch 138 Ashby

Defendant

Judge:                            The Honourable Justice Cindy A. Bourgeois

Heard:                            February 8, 9, 10, April 8, 2011, in Sydney, Nova Scotia

Written Decision:  April 12, 2011

Counsel:                         Alan Stanwick, for the plaintiff

Christopher Conohan, for the defendant

By the Court:

Introduction

[1]              The Plaintiff, Henry Nichol, has brought an action against the Defendant Royal Canadian Legion, Branch 138, hereinafter the "Ashby Legion" or “Defendant Legion”, alleging defamation.  Mr. Nichol was the Chief Bar Steward at the Ashby Legion, having been employed either in that capacity or as a bartender, in excess of 11 years.  His employment was terminated in August of 2003, and Mr. Nichol alleges that thereafter, he was defamed by the Ashby Legion in a number of ways.

[2]              Following his dismissal, Mr. Nichol lodged a complaint with the Nova Scotia Labour Standards Tribunal.  In a decision rendered February 9, 2006, the Tribunal found that Mr. Nichol had been wrongfully dismissed by the Ashby Legion, and he was subsequently re‑instated as a result thereof.  This Court was asked by both parties in the present action, to consider the impact of the findings made by the Labour Standards Tribunal, and did, by means of a pre‑trial motion, determine that the doctrine of res judicata had some limited application to the matters presently being litigated (see Nichol v. Royal Canadian Legion, Branch 138 Ashby, 2011 NSSC 11).

The Evidence

[3]              The Court does not intend to review and recount every aspect of the evidence elicited at trial.  To understand the conclusions ultimately reached herein, it is helpful however, to summarize the most salient aspects of the evidence provided by the parties and witnesses.

The Plaintiff ‑ Henry Nichol:

[4]              Mr. Nichol testified that he had been employed with the Ashby Legion for over 11 years.  When he was terminated in August of 2003, he was the Chief Bar Steward.  He was also a member of the Legion, as his father had been before him.  He testified regarding the financial and emotional difficulties that he encountered following his dismissal in 2003.  He was re‑instated in accordance with the decision of the Labour Standards Tribunal in 2006, however, this only served to alleviate somewhat the financial and emotional consequences of the earlier termination.

[5]              Mr. Nichol was able to return to work at the Ashby Legion for approximately a year before his poor health required him to once again depart.  He has been in receipt of disability benefits, and at the time of trial was also undertaking educational pursuits with the hopes of finding employment compatible with his abilities.

[6]              In terms of the allegations of defamation, Mr. Nichol recounted that he was called to the Legion by President Mel Crowe for a meeting on August 29, 2003.  At that time he was advised that he was being dismissed.  He advised the Court that within the same day, he was being approached by friends and acquaintances who reportedly had heard that he had not only been terminated, but that he had lost his job due to theft.  These types of contacts continued for some period following his defamation.  On cross‑examination, Mr. Nichol agreed that none of these contacts had indicated that the source of their information as to the cause of his dismissal, originated with members of the Ashby Legion Executive.

[7]              Mr. Nichol testified that he attended several general membership meetings at the Ashby Legion following his dismissal, where the subject of his, and two other bartenders' terminations, was a topic of discussion.  For the first several meetings, the topic was one of considerable interest.  Mr. Nichol testified that at the first General membership meeting following his dismissal, held during the second week of September, that Mr. Vic Baker, Chair of the Audit committee, gave a report to the membership.  In that verbal report, Mr. Nichol could recall a number of statements being made by Mr. Baker including that according to his review, the percentage of profit in bar sales had been dropping.  Mr. Baker reportedly mentioned a concern with the beer draft taps being broken, and also that drinks were being sold to patrons by certain bartenders outside of Happy Hour.  Mr. Nichol testified that he recalled Mr. Baker making comment in his report questioning the "honesty and integrity" of the bartending staff.

[8]              Mr. Nichol, in light of the above comments, testified that he interjected at the meeting, asking for further clarification as to what was being alleged, and in particular whether he, or other bartenders were being accused of theft.  Although Mr. Baker did not say that he viewed matters as constituting theft, Mr. Nichol testified that Mr. Baker did utilize the terminology "misappropriation of funds" to describe the concerning behaviours of some of the bartending staff.  Mr. Nichol testified that he viewed these comments, made in the course of the membership meeting, as alleging serious wrongdoing on his part, and causally related to his termination.

[9]              Mr. Nichol testified that he applied for Employment Insurance benefits following his termination, and was subsequently denied.  In a telephone conversation with an EI representative, Mr. Nichol was advised that his claim was denied as his employer had indicated that he may have committed fraud, which resulted in his dismissal.  It was Mr. Nichol's understanding that the EI representative, in explaining the reasons for dismissal, in particular the potential fraudulent conduct, was reading to him from material submitted to Human Resources by the Ashby Legion.  Mr. Nichol testified that he appealed the initial decision, and subsequently received employment insurance benefits.  Mr. Nichol testified that he had obtained a copy of the written material submitted to Human Resources Canada by the Ashby Legion in response to his request for benefits.  This document was submitted into evidence (Exhibit 2, Tab 6), which contained the following:

The reason for dismissal of Henry Nichol and two other employees is as a result of their unauthorized conduct in their capacity as bartenders employed with the Royal Canadian Legion, Branch 138.  Specifically, Mr. Nichol, together with two other bartenders, were dismissed for caused (sic) after a lengthy and thorough investigation into practices being used by them in connection with carrying out their job functions which, in the opinion of the Legion, clearly were unauthorized and may be considered fraudulent.

[10]         Similarly, Mr. Nichol testified regarding his concern relating to the Ashby Legion's communication with London & Midland Insurance Group, with whom he held loan insurance.  Specifically, a letter was forwarded to the Ashby Legion by the insurer seeking information, to which a response was provided.  Entered into evidence as Exhibit 2 Tab 10, the form letter contained the question: "Was Mr. Nichol dismissed from work on August 29, 2003 due to willful or criminal misconduct?"  The letter provided space for either a "Yes" or "No" response to be provided.  "Yes" was completed on behalf of the Ashby Legion.  It should be further noted that the letter contains the following definitions in relation to the above question:

**Willful misconduct means, a transgression of some established and definite rule of action, a forbidden act, a dereliction of duty willful in character, improper or wrong behavior but not negligence or carelessness; **Criminal misconduct means unlawful behavior as determined by local, provincial or federal law.

[11]         Mr. Nichol testified that he was also concerned with respect to the Ashby Legion's decision to revoke his bar privileges following his termination.  Although permitted to go to the Legion, he was not entitled to attend at the bar.  He testified that he recalled receiving correspondence advising of this decision, and was unaware that this privilege had been re‑instated until hearing evidence in the course of the Labour Standards Tribunal proceedings.

[12]         Mr. Nichol testified that his termination from the Legion was very difficult for him.  He submits that a large emotional toll was exerted due to people asking him whether he had in fact stolen from his former employer.  He became depressed, and found himself becoming withdrawn.  He was treated by his family physician and psychiatrist, and was prescribed medication "for his nerves".

[13]         On cross‑examination, Mr. Nichol acknowledged that he did, prior to his termination, sell drinks at Happy Hour prices, outside of the allotted time frame.  He indicated this breach of policy had been going on for some time, and by other employees.  Further, he was unable to relate any of the comments he heard from individuals who had approached him, questioning whether he had stolen from his employer, to information originating from members of the Ashby Legion Executive.  Mr. Nichol also testified that he had, for several days following his dismissal, picketed the Ashby Legion as part of calling public attention to his plight.  This was reported in the local newspaper.  

Ron Gillis:

[14]         Ron Gillis testified on behalf of the Plaintiff.  He and Mr. Nichol are friends, and he was also a member of the Ashby Legion during the time frame leading up to, and following the Plaintiff's dismissal.

[15]         Mr. Gillis testified that he first became aware of Mr. Nichol's termination from the Ashby Legion, the following day.  While at a local tavern, a bartender advised him that his "buddy" Nichol had been fired the night before, having been caught "with his hand in the cookie jar".  Mr. Gillis then proceeded to the Ashby Legion, where several members milling about advised him that Mr. Nichol had been terminated, and the discussion indicated that he, and the other two bartenders had been caught stealing.  Shortly thereafter, Mr. Gillis went to Mr. Nichol's home, where he found his friend upset, and confirmed the termination had taken place.

[16]         Mr. Gillis attended several General membership meetings at the Ashby Legion, following Mr. Nichol's dismissal.  From his evidence, it is clear that he was very supportive of his friend, and wanted answers as to the reason or reasons justifying the dismissal.  Mr. Gillis testified in particular about the first meeting following the termination, recalling aspects of an Audit committee report presented to the meeting by Mr. Vic Baker.  The witness testified that President Mel Crowe called upon Mr. Baker as Audit committee chair to present a report to the meeting.  Mr. Gillis testified that the report covered a number of issues.  He could recall Mr. Baker speaking about how cash register "x‑tape readings" had been reviewed, and that a drop in bar revenue had been noted over a period of months.  Further, he recalled Mr. Baker commenting about there being issues with accounting for the sale of draft beer, as the tap readings were not functional.  Mr. Baker also explained how it was found that bartenders had been selling drinks at Happy Hour prices, outside of the time set for Happy Hour.

[17]         Mr. Gillis testified that although Mr. Baker never utilized words such as "theft" or "stealing" that the report left the strong impression that bartenders were being dishonest, and with respect to the Happy Hour issue, collecting the full price, and only placing the lesser charge in the till.  Mr. Gillis further indicated that Mr. Baker, on several occasions, either in the course of his report, or responding to questions posed by members, utilized the term "misappropriation of funds".  On cross‑examination, Mr. Gillis agreed that such terminology was not specifically directed at Mr. Nichol's conduct, but was a general comment relating to the findings of the Audit committee's review.  He acknowledged that as Audit committee chair, Mr. Baker would have an obligation to report his findings to the membership.

[18]         Also on cross‑examination, Mr. Gillis confirmed that any information he had heard from third parties regarding the dismissal, was not from Executive members, nor could be traced to the Executive as the source of the information.  Mr. Gillis confirmed that at no time did any member of the Executive utilize words such as "theft" or "stealing" in relation to Mr. Nichol's behaviour or subsequent termination.  He confirmed that he attended Membership meetings and pressed for answers on behalf of his friend.  However, the Executive was reluctant to provide further information, reportedly on the advice of legal counsel.

Additional witnesses called by the Plaintiff:

[19]         The Plaintiff also called Glen Nichol and Duncan MacDougall to testify.  Mr. Nichol is a cousin to the Plaintiff, and a long time employee of the Nova Scotia Liquor Commission.  Mr. MacDougall works for a recycling business, located near the Ashby Legion.

[20]         Both men testified that shortly after the termination, they were approached by several individuals inquiring about Henry Nichol's dismissal, and indicating that it was due to theft on his part.  In both cases, it was not Executive members who had spoken directly with the witness, nor could the information being passed along to them, be traced back to Executive members.  Mr. Nichol did testify that some of the individuals who approached him, did indicate that they had received some information regarding the reason for termination at Legion membership meetings.

Melvin Crowe:

[21]         Mr. Melvin Crowe testified on behalf of the Defendant Legion.  Mr. Crowe has held a number of positions within the Legion organization, including that of President of the Ashby Legion from 1997 to 2004.  He is presently serving on the Executive of that branch as Past‑President.  Mr. Crowe testified as to the basic structure of the Legion Executive committee, which has remained unchanged during his involvement with the organization.  It includes a number of positions, including President, but does not include the Chair of the Audit committee.

[22]         Mr. Crowe testified in particular with respect to the Audit committee during 2003, when chaired by Mr. Vic Baker.  In June or July of that year an accountant had brought to the Executive's attention some concerns regarding the financial operation of the branch, most notably the bar.  As a result, Mr. Baker in his capacity as Audit committee chair was asked by the Executive to undertake an audit of bar functioning.  A report was prepared by Mr. Baker, and submitted to Mr. Crowe for the Executive's review.  This report was entered into evidence (Exhibit 2 Tab 2), and was dated August 19, 2003.  Mr. Crowe testified that upon review of the Audit committee report, the Executive became aware of considerable profit being lost due to drinks being sold at Happy Hour prices, outside of the designated Happy Hour time frame.  The report, almost 2 pages in length addressed a number of issues, under five headings.  As will become apparent later in this decision, the contents of that report are relevant to the factual findings reached by the Court.  As such, a summary of the report contents, and the issues addressed may be helpful. 

[23]         Broken into headings the report addressed the following:

a) Happy Hour Sales ‑ the report outlines a concern respecting X‑tapes, which are "detailed bar sales printout tapes by individual transaction", not being maintained.  Mr. Baker reportedly found some cash register tapes in the garbage can, and by examining the recorded time of the sale and amount charged, was able to conclude that "all bar staff was not complying with the Branch's Happy Hour Policy of selling liquor and bottled beer at a reduced rate exclusively from the hours of 4 ‑ 6 p.m."  Mr. Baker was not able to however, indicate how long this violation had been taking place, or the exact amount of the resulting financial loss.  He added further, "It is also not determinable, by myself, as to whether the customers were charged the proper price and the Happy Hour button entered on the register with the difference being taken by the bar staff or whether only the reduced Happy hour price was in fact collected from the customers." (Emphasis added).

b) No Sales ‑ the report also identifies a concern relating to the sales records identifying a large number of "no sales" transactions, which "result in the cash drawer being opened for no apparent reason by certain bartenders".

c) Draft Beer Sales Analysis ‑ the report identified that a review of supplier's invoices over a five month period in 2003 in terms of kegs provided, should have resulted in beer sales of approximately 9500 glasses.  However, branch documents only show sales of 4454 glasses, a concerning discrepancy.  It was recommended that the beer meter, which had been broken for some time, be fixed, in order to have better internal control.

d) Gross Profit ‑ the report identified a drop of 6.6% in bar sales over the preceding year, noting "as there has been no changes in sales pricing or the beer or liquor costs, this reduction in gross profit cannot be explained by myself".

e) Conclusion ‑ the final paragraph of the report reads: "Based on the above findings concerning the analysis of the bar operations and the deterioration in the financial operations of the branch, covered under a separate memo, I feel that it is imperative that action be taken quickly with respect to the bartending staff in addressing their apparent lack of honesty and integrity." (Emphasis added)

[24]         In light of the report, a meeting was held with Mr. Nichol who confirmed that he had personally been involved in the practice of selling reduced price drinks at times other than Happy Hour.  Based on the report of the Audit committee, and after receiving legal advice, the Executive determined it was appropriate to dismiss Mr. Nichol and two other bartenders.  Mr. Nichol was terminated on August 29, 2003, being advised of such in a meeting with Mr. Crowe, and also being delivered a letter of termination on that date.

[25]         Mr. Crowe testified that other than the members of the Executive and legal counsel, Mr. Nichol's situation, and reasons for his dismissal were not discussed with anyone.  Mr. Crowe indicated that he had considered Mr. Nichol a friend, and felt badly about the circumstances.  He indicated to his knowledge, none of the Executive members believed, nor expressed the view that Mr. Nichol had committed theft.  In fact, the Executive discussed that they wanted to be very certain that none of the terminated bartenders were viewed as being accused of theft or stealing, and the Executive confined their comments about the situation accordingly.  As such, criminal proceedings were not even contemplated, nor was he aware of anyone, on behalf of the Ashby Legion Executive, accusing Mr. Nichol of "stealing".  Although a possible suspension in relation to membership privileges was mentioned in the termination letter, Mr. Crowe testified during his direct examination, that he did not recall that such disciplinary proceedings were ever taken against Mr. Nichol.

[26]         Mr. Crowe was asked in direct examination about the Legion's communications with Human Resources Development Canada (HRDC) following Mr. Nichol's termination.  His evidence disclosed that the Legion received a letter dated September 15, 2003 from HRDC which posed a number of questions, in light of an application for benefits having been made by Mr. Nichol.  Mr. Crowe testified that he, with the assistance of legal counsel, prepared a written response, and that he felt the Legion was obligated to respond to the inquiry.  The written response, dated September 25, 2003 was entered into evidence (Exhibit 2, Tab 6), and as noted above, contained a statement that the conduct of Mr. Nichol and his two co‑workers "clearly were unauthorized and may be considered fraudulent".  Mr. Crowe indicated that he chose to utilize the word "may" as he did not want to accuse Mr. Nichol of definite wrongdoing.  Mr. Crowe was cross‑examined closely on his choice of words in this particular phrase.  He acknowledged that he was aware that someone being "fraudulent" was a serious matter, and that "fraud" was a criminal offence.  He testified that he felt however, that the use of "may be considered fraudulent" was necessary for the Legion to comply with their duty to respond to HRDC's inquiry.

[27]         In direct examination, Mr. Crowe was also questioned regarding the letter sent to London & Midland Insurance Group, by Branch Secretary Kevin Luedey in March of 2004.  Mr. Crowe testified that he was aware of receipt of the letter, and spoke with Mr. Luedey as to how the inquiry should be answered.  He testified that Mr. Luedey advised that he intended to answer the question "Was Mr. Nichol dismissed from work on August 29, 2003 due to willful or criminal misconduct?" with a "Yes", because Mr. Nichol had been terminated for "misappropriation of funds".  Mr. Crowe testified that he agreed with Mr. Luedey's approach and directed him to proceed accordingly.

[28]         Mr. Crowe also testified in his direct examination regarding the conduct and content of Legion General membership meetings following Mr. Nichol's termination.  Mr. Crowe testified that the first membership meeting following the dismissal would have been held in mid‑September, within a couple of weeks of the termination.  It was "heated" and was well attended, with Mr. Crowe estimating at least 100 people being in attendance.  In direct, he testified that as President, he asked Mr. Vic Baker as Chair of the Audit Committee to "deliver his audit report" to the meeting.  Mr. Baker then proceeded to verbally outline to the meeting that he had undertaken an investigation regarding bar sales, and had concluded that the sale of drinks outside of Happy Hour, had constituted a "misappropriation of funds" by bartending staff.  Mr. Crowe testified that at no time did he recall words such as "theft" or "stealing" being used by Mr. Baker during that meeting, but that the term "misappropriation of funds" had been utilized in relation to the bartending staff.  Mr. Crowe explained that at no time did anyone on behalf of the Legion ever suggest, or think,  that the bartenders had stolen, or had been "pocketing" the difference between the actual sale price and Happy Hour prices apparently charged.  The use of the term "misappropriation of funds" was simply meant to describe the loss of $0.85 on every drink sold, contrary to policy, outside of the designated  Happy Hour.  Mr. Crowe confirmed on cross‑examination that Mr. Baker's use of the term "misappropriation of funds" to describe the conduct of the bartending staff at the September General membership meeting, was something that the Executive agreed with.

[29]         The issue of Mr. Nichol being subject to disciplinary sanctions following his dismissal in terms of his membership benefits was also addressed in Mr. Crowe's evidence.  In direct examination, Mr. Crowe testified that he could not recall any type of disciplinary sanctions being taken against Mr. Nichol, although the possibility of such had been referenced in the letter of termination.  In cross‑examination, Mr. Crowe was presented with a letter dated October 11, 2003 which he acknowledged he sent to Mr. Nichol.  That correspondence read in part:

As a complaint has been lodged against you, I regret to advise that you are immediately deprived of all clubhouse privileges.

This action is taken in accordance with Section 304(h) of the General by‑laws of the Royal Canadian Legion.

[30]         Mr. Crowe testified that he now recalled sending the letter to Mr. Nichol, but that a formal hearing into the complaint was never held, as the existence of the dispute before the Labour Standards Tribunal, would serve as a stay.  Mr. Crowe testified that he would have communicated verbally to Mr. Nichol that his membership privileges had been re‑instated, but could not recall when or how this was done.   He confirmed that in the interim, bartending staff would have been made aware that Mr. Nichol was no longer permitted in the bar, however, the reason would not have been given.  There was never a formal hearing held to determine the validity of the initiating complaint.

[31]         Mr. Crowe testified that to his knowledge no member of the Legion Executive, had ever spoken to anyone, in which it was alleged that Mr. Nichol had committed theft resulting in his termination.  The Legion Executive had never authorized any such similar statements either to individuals or the media.

Kevin Luedey:

[32]         Mr. Luedey testified on behalf of the Defendant Legion.  He has been a Legion member for approximately 12 years, and has held the position of branch Secretary for three terms.  Although not on the Executive at the time of Mr. Nichol's dismissal, he held the position of Secretary at the time a letter from London & Midland Insurance Group was received in March of 2004.

[33]         Mr. Luedey testified regarding his response to the above noted letter.  Specifically, he recalled speaking to Mr. Crowe, who advised him to go ahead and respond.  Mr. Luedey testified that he responded "Yes" to the inquiry as to whether Mr. Nichol had been terminated due to "willful or criminal misconduct" because he felt that the breach of Happy Hour policy constituted "willful misconduct" as defined in the letter.  Mr. Luedey indicated that he did not consider "criminal misconduct" to apply to the situation.

[34]         On cross‑examination, Mr. Luedey testified that when discussing the London & Midland letter,  he recalled the term "misappropriation of funds" being used by Mr. Crowe in describing the nature of Mr. Nichol's misconduct.  He was also questioned regarding the process used by the Executive in terms of the presentation of committee reports to General membership meetings.  Mr. Luedey testified that the Executive normally meets before General membership meetings to review the agenda, including what committee reports will be presented.  In his experience, committee reports are either discussed or presented at the Executive meeting, which are in turn approved for presentation at the General membership meeting to follow.  The Executive can direct what information is presented to the General meeting from the committee reports.

Vic Baker:

[35]         Mr. Baker was called on behalf of the Defendant Legion.  At all material times relating to the issues before the Court, Mr. Baker was the Chair of the Audit Committee of the Ashby Legion.  This position is not a member of the Executive. 

[36]         Mr. Baker testified that in June or July of 2003, he was asked to undertake an audit of Legion revenues, given the last annual statements had shown a concerning downwards trend.  He testified as to how he undertook a review of bar operations, which culminated in his memo dated August 19, 2003.  He testified as to the particular concerns he found relating to the sale of drinks at Happy Hour prices, outside of the designated time.  His memo was placed in a sealed envelope and left for President Mel Crowe.  Mr. Baker testified that he did not give the memo, or discuss its contents with anyone else, other than the President.

[37]         Mr. Baker was asked about his participation in the General membership meeting, following the termination of Mr. Nichol from the Legion.  Mr. Baker testified that he recalled being present at the meeting, and that financial information was distributed, and subsequently retrieved from those present before the end of the meeting.  His Memo of August 19th was not distributed at the meeting.  Mr. Baker initially testified that he recalled delivering an audit report at the meeting, but later indicated that his involvement was limited to answering questions posed by people at the meeting, and only when he was directed to do so by President Crowe.  Mr. Baker denied that during his comments he utilized words such has "lack of honesty or integrity" to describe bartending staff.  He denied utilizing the words "misappropriation of funds".

[38]         On cross‑examination Mr. Baker continued to insist that he did not present verbally, or otherwise any type of report to the General membership meeting, he only addressed questions at the request of President Crowe.  He denied reading his August 19th memo at the meeting, and did not agree that it could, or should be referenced as being an "audit report".  He denied that President Crowe requested that he present an Audit committee report at the meeting, but merely would ask him to respond to particular questions being raised during the meeting, which he did.  Mr. Baker denied, adamantly, that he was authorized by the Legion Executive to speak on its behalf during the meeting, including when answering questions President Crowe directed to him.

[39]         Mr. Baker testified that following the submission of his memo of August 19, 2003 to President Crowe, he attended at a meeting where Mr. Nichol was interviewed regarding his bar practices.  Mr. Baker testified that he did not believe that the contents of his memo played any part in the decision to terminate Mr. Nichol or the other bartenders.

Position of the Parties

Position of the Plaintiff Nichol:

[40]         Mr. Nichol asserts that based upon the evidence, he has been defamed by the Defendant Legion in three instances:

1) by virtue of the contents contained in the letter to London & Midland Insurance, sent by Legion Secretary Kevin Luedey;

2) by virtue of a statement contained in a letter from President Mel Crowe to HRDC;                 

3) by virtue of oral statements made by and on behalf of the Defendant Legion at General membership meetings following his termination.

[41]         With respect to the correspondence directed to London & Midland Insurance, Mr. Nichol submits that by answering "Yes" to the question "Was Mr. Nichol dismissed from work on August 29, 2003 due to willful or criminal misconduct?", that such constituted defamation.  With respect to the defences  raised by the Defendant Legion, although agreeing that the factual situation would initially attract the protection of qualified privilege, Mr. Nichol asserts that the privilege was both exceeded and defeated by virtue of the existence of malice on the Defendant Legion's part.

[42]         Mr. Nichol makes the same argument as outlined above in relation to the letter submitted to HRDC by Mr. Crowe.  The main concern with respect to that piece of correspondence was the inclusion therein of the phrase "may be considered fraudulent".  On behalf of the Plaintiff, Mr. Stanwick argued that the ordinary meaning of "fraudulent" to reasonably minded persons, would connote criminal or dishonest behaviour, and as such, the words are defamatory.  Again, it is argued that the defence of qualified privilege cannot stand with respect to this statement, as the Defendant Legion exceeded the scope of its duty to provide information to HRDC, especially when one considers the specific questions posed to it.  Mr. Stanwick asserts that the defence of justification cannot apply to this particular phrase, as Mr. Nichol has not been found to have acted  fraudulently either at the time of his dismissal, or at any time afterwards.

[43]         Mr. Nichol further argues that he was defamed by virtue of oral statements made at several General membership meetings following his termination.  In particular, Mr. Stanwick pointed to the use of the phrase "misappropriation of funds" by Vic Baker during the September meeting, and at subsequent ones, as being clearly inappropriate and defamatory, given its plain and ordinary meaning.  It is submitted that as Mr. Baker was asked to deliver a report to the meeting by the President, and also directed to answer questions from the floor by Mr. Crowe, that the Defendant Legion cannot avoid liability for his defamatory statements.  It was further argued, that as the statement was not true, that the defence of justification did not apply.  Further, that any defence of qualified privilege could not succeed, given that the comments made went beyond the Defendant Legion's duty to report to the membership the reason for the bartenders' dismissals.

[44]         In response to an argument raised by the Defendant Legion that the phrases "may be considered fraudulent" and "misappropriation of funds" were clearly innuendo, and as such, needed to be specifically plead, Mr. Nichol submitted that as the phrases, on their face, are clearly capable of being defamatory, that the concept of innuendo did not apply to the circumstances.

[45]         Regarding damages, Mr. Nichol submitted that he had experienced great distress and humiliation arising from not only his dismissal, but his subsequent defamation by the Defendant Legion.  The comments, most particularly those made at General membership meetings, served to make a bad situation worse for the Plaintiff.  He submits that in addition to general damages, that the Court should view the Defendant Legion's high handed and malicious actions as sufficient to justify an award of both aggravated and punitive damages.   Mr. Nichol is seeking $50,000 under each of the three damage headings.

Position of the Defendant Ashby Legion:

[46]         The Defendant Legion submits that none of Mr. Nichol's claims of defamation should be considered adequate to meet the test required at law to establish the tort.  Although much evidence was adduced at trial about Mr. Nichol and others, hearing in the community that he had stolen from his employer, none of these statements can be traced back as originating from the Defendant Legion.

[47]         Regarding both letters, the Defendant Legion submits that there is nothing contained therein that could remotely be considered defamatory to Mr. Nichol.  The choosing of "Yes" on the pre‑prepared form, could not, in any circumstance be viewed as conveying a defamatory meaning.  The clause "may be considered fraudulent" in the HRDC letter, similarly, did not carry a defamatory connotation.  It was further submitted that even if such comments were found by the Court to be defamatory, that the defences of justification and qualified privilege would apply.

[48]         Regarding statements allegedly made at General membership meetings, Mr. Conohan on behalf of the Defendant Legion argued that it was open to the Court to find that the term "misappropriation of funds" had not been used by anyone present, most notably Mr. Baker or Mr. Crowe.  In the alternative, if such words were uttered, they are not, especially when considering the context of the situation, capable of being given a defamatory meaning by a reasonable listener.  If defamatory, it was submitted that there is no evidence to establish that Mr. Baker in using such phraseology, did so with the authorization of the Defendant Legion, and would have certainly exceeded any authority which may have been given to him in relation to presenting a report, or responding to questions.  As such, the defence of corporate authority would apply.  It was further submitted that any such statements would clearly be subject to the protection afforded by virtue of qualified privilege, in the event the Court found them to be defamatory.

[49]         The Defendant further raised a concern with respect to the failure of Mr. Nichol to properly plead "innuendo" and that such would apply to the statements "may be considered fraudulent", and "misappropriation of funds".  The Court was encouraged to consider an appropriate remedy in relation to Mr. Nichol's oversight in this regard.

[50]         Regarding damages, should the Court find that Mr. Nichol was able to establish defamation, which is of course opposed by the Defendant, that there is absolutely no justification to award aggravated or punitive damages.  There is no evidence before the Court to suggest that the Defendant Legion acted in a high‑handed or malicious fashion towards Mr. Nichol.  In fact, it was asserted that the Defendant Legion behaved in a contrary fashion, trying to control the circumstances of the dismissal, abide by Legion policy, and treated Mr. Nichol more than fairly upon his reinstatement.  The Defendant Legion further asserted that to a great extent, Mr. Nichol, by his own actions, most notably picketing the Legion building and speaking to the media, served to spread his dismissal and the speculation as to the reasons for it,  in the general community.

Issues for Determination

[51]         There are two broad issues to be determined by this Court.  Firstly, has the Defendant Legion committed the tort of defamation in relation to Mr. Nichol?  Only if the answer to that inquiry is in the affirmative, does the Court then need to address what damages have been sustained and the quantification thereof.

[52]         In determining liability within the context of this matter, the Court must address the following more discrete issues:

a) Do statements contained in the letters to HRDC and London & Midland Insurance Group from the Defendant Legion constitute defamation?

b) Has the Defendant Legion, or others authorized on its behalf, made any other statements, which may constitute defamation as defined by law?

c) In the event the letters, or other statements are found to be defamatory of Mr. Nichol, does the Defendant Legion have a valid defence?

The Law

[53]         Prior to addressing the specific questions outlined above, a review of the law relating to defamation, and the defences raised herein, may be helpful.  Although a creature of the common law, some legislative modifications have occurred in recent years.

Statutory provisions:

[54]         The Defamation Act, R. S. N. S. 1989 c. 122 has several provisions which are relevant to note for the purpose of the determinations to follow.  Starting with some statutory definitions, Section 2 states:

2.  In this Act,

(b) "defamation" means libel or slander;

(d) "public meeting" means a meeting bona fide and lawfully held for a lawful purpose and for the furtherance or discussions of any matter of public concern, whether admission thereto is general or restricted;

[55]         Section 5 addresses the issuance of an apology and reads:

5.  In an action for defamation in which the defendant has pleaded a denial of the alleged defamation only or has suffered judgment by default or judgment has been given against him on motion for judgment on the pleadings, he may give in evidence, in mitigation of damages, that he made or offered a written or printed apology to the plaintiff for the defamation before the commencement of the action or, if the action was commenced before there was an opportunity of making or offering the apology, that he did so as soon afterwards as he had an opportunity.

[56]         As the Defendant has raised the defence of justification, Section 9 may be relevant.  It reads:

9.  In an action for defamation in respect of words containing two or more distinct charges against the plaintiff, a defence of justification shall not fail by reason only that the truth of every charge is not proved if the words not proved to be true do not materially injure the plaintiffs reputation having regard to the truth of the remaining charges.

Common law:

i) Establishing defamation

[57]         As noted above, the law of defamation has a rich history within the common law.  A foundational element of the tort, and its very purpose, was eloquently described by Cromwell, J.A. (as he then was) in Butler v. Southam Inc., 2001 NSCA 121, as follows:

[17] It is an essential element of the cause of action for defamation that the words complained of should be published ‘of the plaintiff.': Knupffer v. London Express Newspaper Ltd., [1944] A.C. 116 at 118 (H.L.(E.)).  This requirement is fundamental: the law of defamation exists to protect the plaintiff's reputation from unlawful injury by requiring those who publish defamatory material to pay compensation.  As Raymond E. Brown put it in The Law of Defamation in Canada, Carswell (2nd, 1999) at pp. 298‑ 99, "In an action for defamation, it is the plaintiff's reputation that must be adversely affected. ... [I]n order to recover, the plaintiff must plead and prove that he or she is the one to whom the defamatory statement refers, that is, it must be shown to have been published ‘of and concerning the plaintiff'."

[18] The rule that allegedly defamatory material must be published of and concerning the plaintiff is, thus, a practical expression of the law's objective to protect against injury to the plaintiff's reputation.  That this is a worthy goal cannot be doubted.  The reputation of an individual is fundamentally important.  A good reputation fosters an individual's self‑image and sense of self‑worth.  Legal protection of that reputation, therefore, reflects the innate dignity and privacy of the individual, two of the values which underlie rights and freedoms guaranteed by the constitution (see, e.g. Cory, J. in Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130 at para. 107 ff.).

[19] While the law of defamation seeks to protect the plaintiff's right to unjustified interference with his or her reputation, it does so in a way which recognizes other important values.  Prime among them is freedom of expression, a fundamental right and the life‑blood of democracy.  As Cory, J. put it in Hill, supra at p 101, "Without ... freedom to express ideas and to criticize the operation of institutions and the conduct of individual members of government agencies, democratic forms of government would wither and die."

[20] Defamation law, therefore, must reconcile protection of reputation with the competing demands of free speech; Professor Fleming has gone so far as to call this its central problem.  He noted that both freedom of expression and protection of reputation are dearly prized in our society and that the " ...complex web of checks and balances which characterize the contemporary law of defamation can be explained in part as the law's ... attempt to come to terms with this difficult dilemma": John G. Fleming, The Law of Torts (9th, 1998) at 580.  It follows that, in defamation law, both the formulation of legal principles and their application to specific cases must take due account of these important, but often, competing values.

[58]         The required elements to establish the tort of defamation were succinctly stated by Stewart, J. in Hiltz and Seamone Co. v. Nova Scotia (Attorney General) (1998), 164 N.S.R. (2d) 161, as follows:

[15] No action for defamation can be maintained unless the plaintiff can establish a prima facie case consisting of the following elements:

1.  the words complained of were published of and concerning or related to the plaintiff;

2.  the words were published to another party by the defendants or in circumstances in which the defendants are responsible for the publication, the extent of the publication being a consideration in assessing damages;

3.  the words were defamatory of the plaintiff in that they were false statements about the plaintiff to its discredit. (Sir Brian Neill, Duncan & Neill on Defamation, 2d ed., (London: Butterworths, 1983) at p. 21).

[59]         The first element as noted above, requires a plaintiff to establish that the offending words or statement was referring to him.  This requirement was described by Cromwell, J.A. in Butler, supra as follows:

[29] The plaintiff must prove at trial that the allegedly defamatory statements are ‘of or concerning the plaintiff'; the jury must be satisfied that the statements lead reasonable people, who know the plaintiff, to the conclusion that the statements refer to the plaintiff; see, for example, Knupffer, supra per Viscount Simon, L.C. at 118.  Steele, J. in Mouammar v. Bruner (1978), 84 D.L.R. (3d) 121 (Ont. H. Ct.) at 123 adopted a passage from Gatley on Libel and Slander, 7th ed. (1974) to describe the approach:

The test of whether words that do not specifically name the plaintiff refer to him or not is this: Are they such as reasonably in the circumstances would lead persons acquainted with the plaintiff to believe that he was the person referred to?  That does not assume that those persons who read the words know all the circumstances or all the relevant facts.  But although the plaintiff is not named in words, he may, nevertheless, be described so as to be recognized; and whether that description takes the form of a word‑picture of an individual or the form of a reference to a class of persons of which he is or is believed to be a member, or any other form, if in the circumstances the description is such that a person hearing or reading the alleged libel would reasonably believe that the plaintiff was referred to, that is a sufficient reference to him.

(Emphasis added in original)      

[60]         As for the requirement for publication, this can take many forms, including oral or written statement, either done in the traditional fashion, or by virtue of more modern modes of communication.  As stated by Stewart, J. in Hiltz and Seamone, supra:

[21] Publication connotes the communication of the statements from one person to another through any medium.

[22] Publication is proven where the defendant publishes the defamatory statements to a person other than the plaintiff, authorizes or intends the person to whom he publishes the statements to repeat or republish them to some third person and/or the repetition or republication of the statements to a third person was the natural probable result of the original publication.

[61]         The question of what constitutes a defamatory statement, has been addressed in a multitude of cases, in a multitude of contexts.  I find particularly helpful, and so adopt, the following test enunciated by Abella, J.A. in Colour Your World Corp v. Canadian Broadcasting Corp. (1998), 156 D.L.R. (4th) 27(O.C.A.):

[14]  I take as my starting point the following definition of defamation:

A defamatory statement is one which has a tendency to injure the reputation of the person to whom it refers; which tends, that is to say, to lower him [or her] in the estimation of right‑thinking members of society generally and in particular to cause him [or her] to be regarded with feelings of hatred, contempt, ridicule, fear, dislike, or disesteem.  The statement is judged by the standard of an ordinary, right‑thinking member of society.  Hence the test is an objective one ...

(R.F. Hueston & Buckley, Salmond on the Law of Torts, 21st ed. (London: Sweet & Maxwell, 1996) at 140 citing Sim v. Stretch 1936, 52 T.L.R. 669 at 671, and Vander Zalm v. Times Publishers (1980), 109 D.L.R. (3d) at 531, 535, 543).

[15] The standard of what constitutes a reasonable or ordinary member of the public is difficult to articulate.  It should not be so low as to stifle free expression unduly, nor so high as to imperil the ability to protect the integrity of a person's reputation.  The impressions about the content of any broadcast ‑ or written statement ‑ should be assessed from the perspective of someone reasonable, that is, a person who is reasonably thoughtful and informed, rather than someone with an overly fragile sensibility.  A degree of common sense must be attributed to viewers.

ii) Defences to defamation

[62]         In the course of its submissions, both written and oral, the Defendant Legion has put forward three primary defences:

a) justification;

b) qualified privilege; and

c) lack of corporate authority.

Justification:

[63]         It is often said that the truth is a complete defence to a claim of defamation.  In Hiltz v. Seamone, supra, Stewart J. concisely summarized the defence as follows:

[115] A statement is not defamatory unless it is false.  As the law presumes a person has a good reputation, a statement with defamatory meaning, tending to destroy or impair the reputation is presumed in the plaintiff's favour to be false and there is no obligation on the plaintiff to prove the falsity of the published statement.  However, a defendant may defend a defamation action by proving that the defamatory statement was true at the time it was made.  This defence is known as the defence of justification and has been plead by the defendants with respect to each of the six bullets in the Letter, excluding the fifth bullet.  The burden of proving the truth of the defamatory statements rests with the defendants.  Justification, or truth of the statements, is a complete defence to the action.

[116] Basic principles are cited by counsel:

1) To succeed in the defence it is necessary for the defendants to prove the truth of the statements complained of not only in their literal meaning but also in such inferential or innuendo meanings as the trier of fact may find the statements bear. (see: Duncan and Neill on Defamation, supra, at p. 51)

2) As the defendants have made a general charge against the plaintiff's reputation/character, proof of one or more specific allegations may not prove an adequate defence.  (see: Duncan and Neill on Defamation, supra, at p. 51)

3) The defendants need not prove that each and every element of the statements made was true.  It is sufficient if the defendants prove that the substance of the remarks, the "sting", is true. (see: Duncan and Neill on Defamation, supra, at p. 51).

4) The defendants cannot justify statements based solely on repeating what the defendants may have been told or rumoured by others.  (Lewis v. Daily Telegraph Ltd., [1963] 2 All E.R. 151 (H.L.) At p. 173).

5) Defence of justification can fail if significant facts have been omitted which, if reported, would create an entirely different impression from the reported facts taken alone or the defamatory statements, while true in their literal meaning, still convey an overall false impression.  (see: The Law of Defamation in Canada, supra, at pp. 517‑519)

6) The defendants are strictly confined to the particulars of justification set out in their defence and cannot give evidence as to matters not fairly included therein without leave to amend. (see: Philip Lewis, Gately on Libel and Slander, 8th ed. (London: Sweet and Maxwell, 1981) at p. 572).

Qualified Privilege:

[64]         Again, the nature of this defence was thoroughly canvassed in Hiltz and Seamone, supra, where Stewart, J. states:

[43] The law recognizes there are certain occasions in public life where there should be no restraints on discussions and debates and a person may utter or write something false and defamatory of another and yet not bear any legal responsibility.  These occasions are privileged.  Qualified privilege relates to certain statements made in the discharge of a public or private duty.  They are statements made about subject matters that both the defendants and the person to whom the statements are published regard as matters of legitimate public interest.  The privilege attaches to the occasion.

[44] Brown, in The Law of Defamation In Canada, supra at Vol 1, page 465 says:

A statement is made on a privileged occasion if it is fairly made by a person in the discharge of some public or private duty . . . provided that it is made to a person who has some corresponding interest in receiving it.  The duty may be either legal, social or moral.  The test is whether persons of ordinary intelligence and moral principle, or the great majority of right‑minded persons, would have considered it a duty to communicate the information to those to whom it was published. 

[65]         And further:

[54] This occasion of privilege, entitling the defendants to write what would be libellous if written in other circumstances, may be defeated in two ways.  Cory, J. in Botiuk v. Toronto Free Press Publications Limited (1995), 126 D.L.R. (4th) 609 (S.C.C.) at p. 626 describes them:

... the privilege is not absolute.  It may be defeated in two ways.  The first arises if the dominant motive for publishing is actual or express malice.  Malice is commonly understood as ill will towards someone, but it also relates to any indirect motive which conflicts with a sense of duty created by the occasion.  Malice may be established by showing that the defendant either knew that he was not telling the truth, or was reckless in that regard.

Second, qualified privilege may be defeated if the limits of the duty or interest have been exceeded.  In other words, if the information communicated was not reasonably appropriate to the legitimate purposes of the occasion, then qualified privilege will be defeated.

[66]         Relating to the existence of malice and the court's need to consider same, Her Ladyship writes:

[74] The protection of the "occasion of privilege" may also be lost by the plaintiff adducing evidence which establishes, on the balance of probabilities, some indirect or improper motive/purpose not connected with privilege on the part of the defendants, thereby showing malice; more specifically, if there is evidence establishing the defendants misused or abused the occasion or used the occasion with a wrong intention; for example:

1) by the publication of that which they knew to be false or having a total lack of belief in the truth of their own statements, or the lack of a genuine belief, (See Raymond Brown, The Law of Defamation in Canada, supra, at p. 741.).  Professor Brown also notes in his second edition, 1994 at page 16‑22: "Proof of knowledge of falsity is the strongest possible grounds for the presence of actual malice".

2) by being reckless with total disregard of the consequences or without caring whether what one said or wrote was true or false; by reckless and therefore, malicious conduct arising from the defendant not having made reasonable inquiry where the means or sources were otherwise readily available to him, or who deliberately refrains from making any inquiry (see: The Law of Defamation in Canada, supra, pp. 16‑33 to 16‑35).

[76] The defendants cannot avail themselves of the privilege if they make the occasion an opportunity for indulgence in private spite or use it for some other dominant indirect or improper purpose.  To determine whether or not the defendants were actuated by malice, I must consider all the circumstances under which the statements were made by the defendants, including their conduct and demeanour.  Did the defendants genuinely believe in the statements truth and if they did believe in the truth of the statements, do other circumstances exist which show malice on their part?  If the defendants held an honest belief in the truth of the statements published, then mere carelessness or negligence or lack of sound judgment or even having no reasonable grounds for the belief will not destroy the privilege, in the absence of proof of malice.

Lack of Corporate Authority:

[67]         The Defendant Legion argues that given its status as a corporate entity, before any statement made by an individual can attract liability to it, the Plaintiff must establish that the individual speaker of the words, did so within certain parameters.  As will be noted below, this assertion is quite correct.

[68]         Professor Brown in The Law of Defamation in Canada, Carswell (2nd, 1999), at pages 1214 and 1215 addresses this as follows:

Corporations as well as private individuals may be made appropriate party defendants in an action for defamation.  The ancient doctrine that corporations were artificial creatures, incapable of the kind of malice necessary for a defamation action, has long since been discarded.  Corporations necessarily act through their officers and agents.  Therefore, they are liable for any defamatory publications of their agents and servants, whenever they act within the course of their employment, or in response to the express authorization of the corporation, or in direct obedience to its orders, or within the authority and power conferred on them by the corporation, or the publication has been subsequently ratified by it.  Thus in Harrison v. Joy Oil Co. Ltd, a company was held liable for the defamatory comments made by its superintendent of service stations who accused a station manager of misappropriating company funds.

[69]         And further  at page 1216:

A non‑profit or benevolent corporation is liable for its torts, including libel and slander, the same as any other corporation.  The fact that it is organized under a special statutory provision, without capital stock, and does not issue dividends to its members, and may not have funds to pay a judgment, makes no difference to its liability.

[70]         Before moving on to address damages, this Court must also, based upon the submissions of the Defendant Legion, address the concept of "innuendo".  Professor Brown in The Law of Defamation in Canada, supra, has provided a succinct definition, as well as what is required to properly plead innuendo.  He writes at page 212:

Where the words complained of are in their natural and ordinary meaning capable of being held to be defamatory, no innuendo is necessary; and what the ordinary man will infer from those words is to be regarded as part of their natural and ordinary meaning and does not require the addition  . . .of an innuendo.  Where the words are not defamatory in their plain and ordinary meaning, but only by virtue of facts or circumstances attending the publication, the plaintiff must set out in his or her statement of claim the specific defamatory meaning which they conveyed to the persons to whom they were published. This meaning is known as the "innuendo".

[71]         And further at page 214:

A "true" or "legal" innuendo arises solely from facts or circumstances, not apparent upon the face of the publication, which give the words a special meaning they ordinarily would not have.  The special meaning may arise from the technical nature of the language or the "slang" or local meanings characterizing the words that are used, or because of some special knowledge or extrinsic facts possessed by those to whom the words were spoken giving a meaning to the words which they ordinarily would not bear.  Therefore, the plaintiff must particularize the facts and circumstances, including any special knowledge which the listeners might possess, or what used to be referred to in common law pleading as the "inducement" or "prefatory averment".

iii) Damages relating to defamation

[72]         The Plaintiff is seeking general, aggravated and punitive damages in relation to the alleged defamation.  The Supreme Court of Canada has outlined the nature of damages available in defamation actions in the oft‑referenced decision of Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130.  The decision of Cory, J. stands for the following propositions:

1) In terms of the assessment of damages, each defamation case is unique.  The assessment of damages "flows from a particular confluence of the following elements: the nature and circumstances of the publication of the libel, the nature and position of the victim of the libel, the possible effects of the libel statement upon the life of the plaintiff, and the actions and motivations of the defendants . . . there is little to be gained from a detailed comparison of libel awards". (see para. 190)

2) The conduct of the defendant, including the absence of the issuance of an apology, up to and including its conduct at trial, can be taken into consideration in the assessment of damages (see para. 185), both general and aggravated. (see para. 186)

3) An award of aggravated damages requires a finding of actual malice, "which increased the injury to the plaintiff, either by spreading further afield damage to the reputation of the plaintiff, or by increasing the mental distress and humiliation of the plaintiff . . .  The malice may be established by intrinsic evidence pertaining to the surrounding circumstances which demonstrate that the defendant was motivated by an unjustifiable intention to hurt the plaintiff".  (see para. 193)

4) An award of punitive damages is not intended to compensate the plaintiff, but rather to punish a defendant "where the defendant's misconduct is so malicious, oppressive and high‑handed that it offends the Court's sense of decency" and are "in the nature of a fine, which is meant to act as a deterrent to the defendant and to others from acting in this manner". Punitive damages should only be awarded where the combined awards of general and aggravated damages are "insufficient to achieve the goal of punishment and deterrence". (see para. 199)

Findings based on the Evidence and Law

a) The London & Midland Insurance Group letter:

[73]         Addressing the necessary elements to establish the tort of defamation, there is no doubt that the letter forwarded to London & Midland Insurance was pertaining to Mr. Nichol, and that it was completed with the Defendant's knowledge and authorization.  Clearly, it was also sent to a third party.  What is contentious is whether the contents of the letter, in particular, the completion of the pre‑prepared question regarding the reason for Mr. Nichol's dismissal with a "Yes", was defamatory.  For the reasons below, I find that it was not.

[74]         The form letter clearly provides two possible factual scenarios which may generate a "Yes" response from a former employer, namely "willful misconduct" or "criminal misconduct".  By completing the question in the affirmative, the recipient could have readily determined that the Defendant Legion viewed the dismissal having been founded in the first scenario.  The Defendant Legion's response did not identify which possible definition applied to the circumstances, but it was not asked to do so, nor do I find that it had an obligation to explain which option prompted the "Yes" response.

[75]         The evidence establishes that the Plaintiff was dismissed for selling drinks outside of Happy Hour contrary to policy.  This in my view, falls within the definition of  "willful misconduct" as specified in the letter, and therefore, the response given to the insurer's inquiry,  was not inaccurate.  Accordingly, it was not defamatory.

b) The HRDC letter

[76]         It is clear, as with the correspondence discussed above, that the HRDC letter, drafted by President Crowe and dated September 25, 2003, was pertaining to Mr. Nichol, was created on behalf of the Defendant Legion, and was published to a third party.  The contentious issue, once again, is whether the statements contained therein are defamatory.

[77]         In the Court's view, there is only one statement contained in the letter directed to HRDC which raises concern.  As referenced earlier herein, it states:

The reason for dismissal of Henry Nichol and two other employees is as a result of their unauthorized conduct in their capacity as bartenders employed with the Royal Canadian Legion, Branch 138.  Specifically, Mr. Nichol, together with two other bartenders, were dismissed for caused (sic) after a lengthy and thorough investigation into practices being used by them in connection with carrying out their job functions which, in the opinion of the Legion, clearly were unauthorized and may be considered fraudulent.  (Emphasis added)

[78]         I accept Mr. Crowe's evidence that he sought legal advice in preparing the letter to HRDC.  As such, it is difficult to conceive that he would not be aware of the ordinary meaning of the term "fraudulent".  In his cross‑examination he confirmed he understood the seriousness of such an allegation, and that "fraud" is a criminal offence.  I do not consider that the use of the word "fraudulent" would trigger a consideration of innuendo, and a requisite need to plead same as argued by the Defendant.  "Fraud" and "fraudulent" are terms which in accordance with their ordinary meaning are capable of being considered defamatory (see Nathason, J. in MacDonald v. Callaghan (1996), 154 N.S.R. (2d) 305), and as such innuendo does not apply.

[79]         I find that the use of the term "may be considered fraudulent" utilized in the context of explaining to HRDC the reason for the Plaintiff's dismissal, could reasonably convey, given its ordinary meaning, that the plaintiff was involved in fraudulent activity. This is a serious allegation, and the use of the word "may" does not, in my view, mitigate from the imputation of criminal conduct.  The statement is defamatory.

[80]         Having reached the above conclusion, the Court must now consider the applicability of the two potential defences, namely justification and qualified privilege.  Having found the statement to be defamatory, the Defendant Legion now bears the burden of establishing the truth of the assertion that Mr. Nichol's conduct "may be considered fraudulent".  There is simply, no evidence which would support such a conclusion.  To the contrary, Mr. Crowe testified that no one on behalf of the Legion ever suggested that there was dishonesty or theft in terms of the Plaintiff's conduct, and as such, I reject the Defendant Legion's argument that such a statement could be considered to be true when written.   The Labour Standards Tribunal heard evidence from both parties, and at paragraph 113 of its decision of February 9, 2006 found:

113.  The Respondent's position is there was fraudulent behaviour by the Complainant and misappropriation of funds.  The Tribunal finds from the evidence of Mel Crowe, President of the Respondent Legion, Vic Baker, Chair of the Audit Committee, and Patsy Field, Office Manager that they could not establish fraud or theft or misappropriation of funds attributable to the Complainant.

[81]         The Court must now consider whether the defence of qualified privilege applies to the statement.  I readily accept and so find, that the Defendant Legion was obligated to respond to the inquiries posed by HRDC.  As such, the defence of qualified privilege is available to the Defendant Legion in the circumstances.  However, the privilege is not absolute, but can be defeated.  One such circumstance is where the statement goes beyond that required to fulfill the obligation, or is excessively wide.  Mr. Crowe expressed the view that it was necessary, in order to comply with the Defendant Legion's obligation to respond to HRDC's inquiries, to include that  Mr. Nichol's conduct "may be considered fraudulent".  I disagree. I have reviewed the specific inquiries contained in the HRDC letter dated September 15, 2003, and note that the Defendant Legion's response did provide a detailed explanation of the existence of a Happy Hour policy and  Mr. Nichol's failure to follow same.  Raising the spectre of fraudulent conduct, was unnecessary and exceeded, in my view, the scope of the qualified privilege.  As such, I find the Defendant Legion liable for the defamatory statement.

c) Alleged statements made by, or on behalf of the Defendant Legion

[82]         During the trial, there was significant evidence adduced respecting a General membership meeting held following the Plaintiff Nichol's dismissal, and various statements allegedly made during the course thereof.   The Court, based on the evidence, makes the following findings of fact:

1) The first General membership meeting following Mr. Nichol's dismissal was held during the second week of September, and was attended by a large number of Legion members, up to 100;

2) During the course of the meeting, President Crowe asked Vic Baker, Chair of the Audit committee to present a report;

3) I find that the report to be provided by the Audit committee at the meeting was intended to be a communication of the findings contained in the Memo provided to President Crowe, dated August 19, 2003 by Mr. Baker;

4) Based on the evidence, I find that Mr. Baker in delivering his report to the meeting, utilized on more than one occasion, the words "misappropriation of funds" when describing the findings of the Audit committee, as it related to the conduct of bartending staff;

5) I accept the evidence of Mr. Nichol, and so find, that in the course of presenting the Audit committee report, Mr. Baker made reference to the percentage in profit of bar sales dropping; that drinks were being sold outside of Happy Hour by certain bartending staff; that beer taps were broken so that the amount of drinks poured could not be monitored; and that he questioned the "honesty and integrity" of the bartending staff;

6) I accept the evidence of Ron Gillis, and so find, that during the course of presenting the Audit committee report, Mr. Baker referred to having reviewed "x‑tape readings"; that a drop in bar revenues had been noted; and that there were concerns with respect to how the sale of draft beer was being accounted for;

7) Given the above findings regarding the comments made by Mr. Baker during the meeting, I have no hesitancy in further concluding, and so find, that Mr. Baker, when presenting the report of the Audit committee, very closely relied upon, and repeated many aspects of his August 19th Memo;

8) I find that in requesting that he present the Audit committee report to the meeting, the President Crowe knew, or ought to have known, that Mr. Baker would be reporting the contents of his Memo of August 19, 2003;

9) I further find that in addition to providing a report, Mr. Baker answered questions arising from Legion members during the meeting, and such was at the request and direction of President Crowe.

[83]         Having made a number of findings of fact, I turn now to a consideration of the necessary elements to establish defamation.  Firstly, did the comments complained of, refer to Mr. Nichol?  As noted in Canadian Tort Law (Linden and Feldhusen, LexisNexis: 8th ed. 2006 at p. 770), "the general test as to whether the words are referable to a particular individual is the same as previously noted, that is, whether ordinary sensible people might reasonably believe that the statement referred to the plaintiff".  There is no evidence that Mr. Nichol was referred to by name during the course of the General membership meeting.  I have no difficulty in finding however, that given he and two other bar staff had been terminated in the preceding weeks, and that the report was referencing a recent review of bar operations, that all present would reasonably believe that the comments being made pertained to Mr. Nichol.

[84]         The second element to establish defamation requires the Court to consider whether "the words were published to another party by the defendants in circumstances in which the defendants are responsible for the publication, the extent of the publication being a consideration in assessing damages".  (Hiltz and Seamone, supra at para [15])   It is clear that the fact that statements were made at a Legion membership meeting does not preclude a statement being defamatory, or being considered "published to a third party", although the context will be given further consideration when considering the defence of qualified privilege.  The more difficult aspect of the first element is whether the Defendant Legion is responsible for the publication, given that the words were uttered by Mr. Baker, not a member of the Defendant's Executive.  The Defendant Legion asserts that it should not be held responsible for any defamatory utterances made by Mr. Baker, as there was not an adoption of his words by the Executive, being its operating mind, and that he went well beyond the scope of any authority that the Defendant Legion granted to him.

[85]         With respect, the Defendant Legion's position based upon a "lack of corporate authority" is without merit.  Here, the majority of Mr. Baker's comments came, as I have previously found, from the August 19th Memo previously provided to, and reviewed by the Defendant Legion's Executive.  Having found that the President, as representative of the Executive, knew or ought to have known, when he requested an Audit committee report from Mr. Baker during the meeting, that it would reflect the contents of the earlier Memo, it is clear that the Defendant Legion authorized Mr. Baker's communication.  In doing so, the Defendant Legion would be aware of the contents of the Memo, including Mr. Baker's statement therein that there was "an apparent lack of honesty and integrity" found in relation to bartending staff.  This Court was provided with no evidence that the Defendant Legion instructed Mr. Baker in any way, to confine the comments made during the General membership meeting.  As previously found, Mr. Baker did in fact, utilize words to the above effect during the course of his report to the General meeting.  I find that the Defendant Legion, in requesting Mr. Baker to present a report, authorized his comments.  I reject, as it relates to the words which were contained in the Memo of August 19th, that Mr. Baker exceeded the authority given to him by the Defendant.

[86]         The words "misappropriation of funds" bring different considerations.  Those words did not appear in the August 19th Memo, and accordingly, it is not as readily apparent that the Defendant Legion knew, or ought to have known, that they would be utilized by Mr. Baker in his Audit committee report.  I have no difficulty in concluding, given that the words appeared both in the course of the Audit report, and in answering questions as directed by President Crowe, that Mr. Baker was speaking at the direction and with the authority of the Defendant.  The question becomes whether he exceeded that authority by using those particular words.  In order to avoid liability, it is the Defendant Legion's burden to establish that the use of the words "misappropriation of funds" went beyond the scope of Mr. Baker's authority, and that such words were not ratified or adopted by the operating mind of the Legion.  Based upon the following findings of fact, I determine that the Defendant Legion has not met that burden, and to the contrary, repeatedly endorsed the use of that phrase to describe Mr. Nichol's conduct:

1) Mr. Crowe in his position as the Defendant Legion President, utilized the same term, both at subsequent General membership meetings, and when directing Kevin Luedey as to how to complete the London & Midland Insurance letter;

2) President Crowe, in a letter to Mr. Nichol dated October 11, 2003 advised that his clubhouse privileges were being suspended pursuant to s. 304 of the Legion by‑laws.   I find that the provision relied upon by the Defendant Legion in ordering the suspension was due to its view that Mr. Nichol had committed "theft or misappropriation of funds" (Exhibit 5);

3) The Defendant Legion, in responding to Mr. Nichol's complaint to the Labour Standards Tribunal, asserted in justifying the dismissal, that he had been responsible for misappropriation of Legion funds; and

4) I accept the evidence of Mr. Crowe, and so find, that Mr. Baker's usage of the term "misappropriation of funds" to characterize Mr. Nichol's conduct, was something that the Legion Executive agreed with.

[87]         Turning to the third element, the Court is required to determine whether the words uttered were defamatory of Mr. Nichol, and in particular, are the words "misappropriation of funds" capable in their natural and ordinary meaning, capable of being defamatory, thus alleviating the need to plead innuendo.    The Defendant Legion has strenuously asserted that in using the term "misappropriation of funds", it was simply referring to the fact that moneys were lost due to the sale of drinks at Happy Hour prices, thus resulting in a loss of revenue.  It was asserted that such a term did not intend to convey that there was any theft on the part of Mr. Nichol.  However, the intent of the speaker is not the test to determining whether the words are capable in their ordinary meaning of being, or are in fact, defamatory.

[88]         This Court, in hearing those words, would readily place a negative connotation upon them in terms of the conduct of the person to whom they were referencing.  However, is the Court's understanding of the meaning, being legally trained, and exposed frequently to the criminal interpretation of various terms, reflective of that of a reasonable and ordinary minded person?  Consultation with several on‑line and hard copy English language dictionaries, disclose that the ordinary meaning of the term may include "the diversion of property or money away from the rightful owner".  This meaning is not inconsistent with the usage asserted by the Defendant Legion.  However, in all instances, the meaning may also include conduct which is done dishonestly, for personal gain, with several definitions specifically referencing "theft", "fraud" and "embezzlement" as synonyms.  These common definitions, supports the Court's initial view, that the phrase "misappropriation of funds" is certainly capable in its natural and ordinary meaning, of being defamatory, and thus innuendo does not apply, nor needed to be specifically plead.

[89]         This leaves the question remaining as to whether the words as used at the General membership meeting, were defamatory of Mr. Nichol.  I find that a reasonable, ordinary thinking person in attendance, would find that the use of "misappropriation of funds" served to lower Mr. Nichol's reputation, and suggest that he was responsible for some form of serious wrongdoing. Although sufficient on their own of being defamatory, the context in which the words were utilized (describing the reasons for recent dismissals), and that Mr. Nichol's honesty and integrity were also questioned, undoubtedly heightened the effect.  I turn now to the defences raised by the Defendant Legion.

[90]         The Defendant Legion, to rely upon the defence of justification, has the burden of proving that the statement uttered, namely that there had been a "misappropriation of funds", was true.  As noted in Hiltz and Seamone, supra at paragraph 116:

(The ) defence of justification can fail if significant facts have been omitted which, if reported, would create an entirely different impression from the reported facts taken alone or the defamatory statements, while true in their literal meaning, still convey an overall false impression. (Emphasis added)

[91]         Even if the Defendant Legion satisfied the Court that the term "misappropriation of funds" could literally encompass that Mr. Nichol sold drinks, at a revenue loss, outside of Happy Hour, I find that the words utilized at the meeting served to convey an overall false impression.  I find that a reasonable listener, hearing the Audit committee report, would view the term "misappropriation of funds" as being reflective of fraudulent conduct on Mr. Nichol's part.  Mr. Nichol did not engage in fraudulent conduct, or dishonest conduct whereby he profited.  As such, the defence of justification fails.

[92]         The final consideration, is whether the defamatory statement made, was protected by the doctrine of qualified privilege.  Through his legal Counsel, Mr. Nichol conceded that the necessary circumstances existed to give rise to the occasion being protected by privilege.  As I have already found that Mr. Baker was authorized to speak by the Defendant Legion, any protection afforded to it by virtue of the privilege, equally applies to his utterances, as its agent.  The real issue is whether the privilege can be defeated either by virtue of it being exceeded, or by way of demonstrated malice.  Here, the burden rests upon the plaintiff.

[93]         I am satisfied that the Defendant Legion did have an obligation to its membership to explain the recent findings of the bar audit, including concerns with respect to revenue decreases.  I am further satisfied that the Defendant Legion was obligated to provide an explanation for the recent dismissal of the bar steward and two other bartenders.  I find however, that these two obligations could have readily been achieved, without utilizing the term "misappropriation of funds".  Given the common meaning attributed to that term, should the Defendant have legitimately felt that such a phrase was necessary to meet its obligation, it should have provided further explanation and clarification that it did not intend to connote fraudulent or other dishonest behaviour upon the bar staff.  This is especially true where, in the same context, the "honesty and integrity" of Mr. Nichol and his co‑workers were questioned.  I find that Mr. Baker as agent of  the Defendant Legion, exceeded the privilege afforded to the occasion.

[94]         Even if I am incorrect in the above assessment, I find that Mr. Nichol has, based upon the evidence before me, established that the Defendant Legion acted in "reckless disregard" of how the statements uttered, could be reasonably interpreted by those present, especially in light of the circumstances.  Although I am not satisfied that the evidence has established actual malice being held in relation to Mr. Nichol, the circumstances do fall within the legal meaning of malice for the purpose of defeating the defence of qualified privilege.

[95]         Based upon the above, I find that the Defendant Legion defamed Mr. Nichol by virtue of the utterances made during the September General membership meeting, and that no valid defence has been established.

d) Damages:

[96]         In must be remembered that the assessment of damages in a defamation action is determined by the unique circumstances of the particular plaintiff and defendant before the Court.  I have found that Mr. Nichol was defamed on two instances by the Defendant Legion, both in terms of a written statement contained in correspondence directed to HRDC, and in verbal statements made at a Legion membership meeting held in September of 2003.

[97]         I find that of the two instances of wrongdoing, it was the verbal statements made at the Legion which had the greatest impact upon Mr. Nichol, in terms of his reputation and the emotional consequences arising therefrom.  As noted earlier herein, Mr. Nichol was an employee of the Defendant Legion for over 11 years, and held, at the time of his dismissal in August of 2003, the position of head bar steward.  Mr. Nichol's father had been heavily involved with the Defendant Legion, having been not only a longstanding and well respected member, but held the same position as his son for a number of years.  I am satisfied that the Defendant Legion was an important part of Mr. Nichol's life, not only from an employment, but social point of view.  The loss of his employment was a blow to him, however, the defamatory statements, made to a large gathering of his peers, made a difficult situation much worse.

[98]         Significant evidence was presented at trial which satisfies me, that very shortly after Mr. Nichol's dismissal, within hours, speculation began amongst Legion members and in the wider community, as to the reason behind his termination.  Gossip abounded, which included some who questioned whether Mr. Nichol may have acted in some dishonest fashion.  I am satisfied that this gossip had started, and the rumour mill was churning well before the September General membership meeting.  Unfortunately, how the Defendant Legion chose to address the termination of Mr. Nichol during that meeting, and in particular the words that were used, would have done nothing to quell the rumours and "raised eyebrows", and in all likelihood, would have confirmed the suspicions held by some.  That is truly unfortunate.

[99]         I have, in assessing damages, considered Mr. Nichol's own actions, in terms of the picketing he undertook, and his communications with the local media.  Although this may have brought the existence of the situation to a wider audience, I do not view it in anyway, as alleviating the Defendant Legion from its responsibility in relation to the defamatory comments made.   I further find that the picketing took place several weeks following the termination, and accordingly, could not account for the initial rumours within the Legion and wider community regarding Mr. Nichol's conduct.

[100]     As noted in Hill, supra, this Court in assessing both general and aggravated damages can examine the conduct of the Defendant Legion from the time of the defamatory statement up to and including to trial.  I have taken into consideration that the Defendant Legion has not issued an apology to Mr. Nichol.  I have also considered that the Defendant Legion, through the course of the Labour Standards Tribunal continued to reference Mr. Nichol as having misappropriated funds, and I find, based upon the Tribunal decision, that allegations of theft and fraud were also raised in that forum.  Even after the Labour Standards Tribunal rejected such arguments, it is noted that the Defendant Legion, in a subsequent hearing which was to determine an appropriate remedy, argued against Mr. Nichol's reinstatement, submitting a lack of trustworthiness on his part (Exhibit 3).  The Court has also noted, that following his dismissal, Mr. Nichol's clubhouse privileges were suspended, due to the Defendant asserting "theft or misappropriation of funds" on his part.  I find that Mr. Nichol was not notified that he was re‑instated, and only discovered same in the course of the Labour Standards Tribunal hearings two years later.

[101]     All of the above is concerning conduct, as it appears to be contrary to the assertion made at trial on behalf of the Defendant Legion by President Crowe, that the Defendant Legion never held a belief that Mr. Nichol had stolen funds or, other than not following the Happy Hour policy, acted dishonestly.  What the Defendant Legion asserts, and how Mr. Nichol was treated, at least to the time of his ordered reinstatement, are very incongruent.

[102]     Based upon all of the above, I conclude that general damages in the amount of $45,000.00 is appropriate in the circumstances.

[103]     The above being said, although the Court has obviously found fault with how the Defendant Legion treated Mr. Nichol, I am unable to conclude from the evidence that any of the officers or agents of the Defendant harboured actual malice towards him, or were "motivated by an unjustifiable intention to hurt" him. (Hill, supra)   As such, I decline to award aggravated damages.

[104]     Further, I am unable to conclude from the evidence that the conduct of the Defendant Legion was so malicious, high‑handed or oppressive, that the Court's sense of decency is offended.  As such, I decline to award punitive damages.

Conclusion

[105]     The Defendant Legion shall pay to the Plaintiff Henry Nichol, general damages in relation to the two instances of defamation, in the amount of $45,000.00.

[106]     Should the parties be unable to reach agreement with respect to costs, I will accept written submissions, to be filed within 20 days of the release of this decision.

                                                             J.