Defamation and Breach of Fiduciary Duty

The Saskatchewan Court of Appeal has delivered its decision in a case involving the Regina Public School Board (the Board), which alleged in its statement of claim that YAS-Youth Athlete Saskatchewan Inc. (YAS) had libeled the Board via certain emails and requested an injunction to prevent further libelous publications, along with damages. In a subsequent amendment, the plaintiff alleged additional defamatory publications by an individual who was then added as a defendant.

Also, the board claimed defamation by association in that information on the YAS website “continues to wrongly communicate to the community at large that [the Board], its schools and its staff support YAS and its program”. The allegation is linked to the individual added as a defendant, who was one of the incorporators of YAS, and was convicted in 1981 of two charges of having sexual intercourse with females aged 14 to 16 and two charges of indecent assault of females who were members of a church female basketball team that he coached.

In their statement of defence, YAS and the individual denied that the publications complained of were defamatory. They filed a counterclaim against the Board, its Chairman and the law firm representing the Board. The counterclaim alleged that the law firm had acted for the individual when he pleaded guilty to the aforementioned charges. It was further alleged that, in an attempt to pressure YAS and the individual to cease communications/association with the Board, the law firm caused to be published in newspapers in Regina and Saskatoon several statements specifically citing the individual and the facts of his convictions in 1981, notwithstanding that the law firm knew that the individual was subsequently granted a pardon by the National Parole Board. According to the counterclaim, the law firm’s action constituted torts of breach of fiduciary duty, intimidation, defamation, conspiracy to injure, abuse of process, injurious falsehood and unlawful interference with economic interest.

The chambers judge agreed with the law firm’s application that the counterclaim disclosed no cause of action and found that the law firm was named therein because it was doing its job as counsel for the Board and that the counterclaim was intended to annoy or embarrass the Board with the hidden motive of removing the law firm as the Board’s counsel.

On the Appeal, the Court of Appeal rejected the finding of the chamber’s judge. It held that since the law firm had acted for the individual in the criminal proceedings, which played a prominent part in the subsequent proceedings it took on behalf of the Board against him, it cannot be said either that the pleadings in respect of breach of fiduciary duty disclosed no cause of action, or that the pleadings were frivolous and vexatious. It held that on the authorities, the individual had the right to bring an action for damages for breach of fiduciary duty by the law firm and was not confined to bringing an application to have the law firm removed as counsel. The court found that the other torts pleaded in the counterclaim did not reveal a viable cause of action. Notably, the allegation of defamation was rejected as it is, despite the pardon, a “historical fact that the convictions occurred and continued to exist for a period of time”.

The court’s ruling was that the entire counterclaim be struck, but that the individual and YAS have leave to file a counterclaim confined to breach of fiduciary duty as set forth in the judgment. Furthermore, as YAS and the individual did not ask for the law firm to be removed as solicitors of record for the Board, the counterclaim is stayed until the original action is completed.

For a copy of the decision, visit:

http://canlii.org/sk/cas/skca/2007/2007skca1.html

Volume V

Defamation and Breach of Fiduciary Duty