Tuesday, November 2, 2010

CASE COMMENT Hansen v Harder: Defence of Responsible Journalism on Matters of Public Importance - Examination of Emerging Defence ~ By C. D. Steinberg

This judgment released yesterday by the British Columbia Court of Appeal canvasses the currently evolving Law of Defamation; specifically with respect to recent judgments by the Supreme Court of Canada setting out criteria for the Defence of "Responsible Communication on Matters of Public Interest", which is available to "journalists" in appropriate circumstances. The clear message delivered by this judgment, as set out below, is that if a journalist intends to rely on this defence, a stringent standard of care will be required to be exercised to verify a story, including making stringent efforts to do so when appropriate.

The appellant Peak Publications Society publishes The Peak. The appellant Derrick Harder was The Peak’s copy editor and edited and approved the three articles. Kevin Tilley, The Peak’s news editor, wrote the articles.

Mr. Hansen has a long history of involvement in student government associations. During the relevant events he was the financial and services coordinator of the Douglas Students Union (the “DSU”), at Douglas College.

A controversy arose between two competing groups within the DSU over Mr. Hansen’s stewardship of the DSU’s financial affairs. Thus, in March 2006 the DSU treasurer, retained a forensic account to perform a forensic review, a process that is significantly less rigorous and extensive than an audit. This was opted for due to financial constraints that made it impossible for the DSU to obtain an audit.

The "review" was very critical of Mr. Hansen’s skills and performance as the financial manager of the DSU, and contained the following comments about Mr. Hansen:

We note that over one hundred cheques, in addition to payroll cheques, were issued payable to Joey Hansen in the year ended August 31, 2005. We understand the auditors have requested from him documentation adequate to support these expenditures, but he has not yet provided same. We have not quantified the amounts involved, as your auditors are working on this, but regardless of the amounts, we regard this as a serious breach of internal control and accountability, and if Mr. Hansen is unable to produce adequate documentation, a misappropriation of funds.
We found a cheque payable to Christa Peters in the amount of $20,000 dated December 6, 2004. The amount was repaid to DSU on December 22, 2004. We understand Christa Peters is the partner of Mr. Hansen, who confirmed that to us and stated that it was intended to be a temporary loan for the purpose of making a down-payment on a house. The cheque was signed by Mr. Hansen and Jeremy Gervan, who Mr. Hansen said “approved” the loan. In our view, Mr. Hansen and Mr. Gervan exceeded their authority, and the loan should have been approved, if at all, by the Representative Committee. Notwithstanding the repayment, this is an example of blatant misuse of DSU member funds.

The report was presented to a meeting of an internal committee during which the accountant presented a summary of his findings. The committee members voted to terminate Mr. Hansen’s employment. Subsequently, however, the committee determined there had not been a proper quorum at the meeting, thus the vote was invalid. Mr. Hansen was placed on a paid leave until the DSU formally terminated his employment in November 2006.

In May 2006 Mr. Tilley received a copy of the report, and as a result interviewed several representatives of the DSU. These inquiries led to publication of three articles about Mr. Hansen.

The first article described the “controversial” financial crisis in the DSU, the fact Mr. Hansen had been terminated and then reinstated as there had not been a proper quorum, and that he was now on a paid leave. It gave a history of the financial difficulties leading to those actions, and cited comments from members of the committee who supported the decisions to terminate Mr. Hansen. At trial, Mr. Hansen established the following statements in the article were defamatory:

… the results of a forensic audit showed serious discrepancies in the way money was handled within the organization …

The forensic audit revealed over 100 unapproved cheques payable to Mr. Hansen, which have yet to be documented or accounted for. Additionally, the auditor found a cheque to Christa Peters, Hansen’s partner, for $20,000 allegedly for a down-payment on a house. The amount was repaid to the DSU two weeks later.

The second article was regarding the two competing groups within the DSU, described financial problems of DSU, and set out this statement, which Mr. Hansen established at trial was defamatory:
The College Board of Douglas College has been withholding the DSU’s funds since last fall following a scathing financial audit which showed significant discrepancies in internal controls as well as possible fraud and misappropriation of funds by the DSU’s Financial Coordinator.

The third article focused on a reported police investigation into the DSU finances and summarized Mr. Hansen’s background with student organizations, and said he remained on leave as investigations continued. Mr. Hansen established at trial that several aspects of this edition of The Peak were defamatory. Its cover had a drawing of two police officers, one holding a magnifying glass and the other a notebook, with a caption reading “Busted! Police launch investigation on Douglas (College) Students’ Union News, page 6.” Page 6 set out this headline:

Police investigate DSU
Police probe launched after financial mishandlings at Douglas Students’ Union

The article that followed included these statements:

The New Westminster Police have launched an investigation at the Douglas Students’ Union into crimes relating to the organization’s finances, the DSU has recently confirmed. The investigation was initiated after an anonymous Douglas College student contacted the police following a forensic auditor’s report showing potential fraud and misappropriation of funds.

The DSU wouldn’t say whether any specific individuals are under investigation, but Joey Hansen, the finance and services coordinator responsible for the union’s finances remains on leave since the auditor’s report.
Hansen was unavailable for comment.

The report notes a number of specific issues that drew attention to Hansen. In particular a $20,000 cheque signed by Hansen was made out to Hansen’s partner for the purpose of making a down payment on a house. The money, although paid back to the DSU several weeks later, was never approved by the organization.

This would not be the first time a high-ranking CFS official has been in the police spotlight.

The article also stated Mr. Hansen claimed “he was entitled to the money as a result of outstanding overtime and other payroll issues.”


The trial judge found an ordinary person would reasonably have understood the first article to mean:

(a) that over 100 cheques had been issued to Mr. Hansen without the approval of his employer and that in spite of the efforts of a professional forensic auditor the cheques could not be documented or accounted for; and

(b) that the auditor had “found” an unapproved $20,000 cheque payable to Mr. Hansen’s partner, Christa Peters, allegedly for a down-payment on a house and that upon the cheque being discovered by the auditor, the $20,000 was repaid to the DSU some two weeks later.

He found the statements in the second article inferred that Mr. Hansen was guilty of fraud and misappropriation of monies or that there were reasonable grounds to reach that conclusion.

He found that the third article, and cover of The Peak, would reasonably be understood to mean:

(a) that the two officers depicted on the cover are involved in a police investigation in which they had “busted” or charged someone as a result of the investigation of the DSU;

(b) that a complaint from an anonymous Douglas College student initiated the police investigation after the forensic review showed potential fraud and misappropriation of monies from the DSU;

(c) that the DSU would not say who was being investigated, but the article then added that Mr. Hansen, the finance and service coordinator responsible for the DSU’s finances, had been on leave since the auditor’s report inferring that Mr. Hansen was the individual under investigation;

(d) that the article further linked the police investigation directly to Mr. Hansen when it drew attention to Mr. Hansen in stating that a $20,000 cheque signed by Mr. Hansen and payable to his partner, Ms. Peters, although repaid, was never approved by the DSU, inferring that Mr. Hansen was guilty of fraud and misappropriation.

After reviewing all evidence, the judge found:

1. there was no evidence Mr. Hansen was guilty of fraud or misappropriation of funds;

2. there was no evidence the police investigated the DSU’s finances - merely rumours of an investigation from a DSU board member who was an opponent of Mr. Hansen, and an unsubstantiated statement from a student; and

3. the inferences flowing from the three articles were false and defamed Mr. Hansen. ...

The appellants declined to prove the truth of the allegations, rather asserted the defence of "qualified privilege" under s. 4(1) of the Libel and Slander Act, and the emerging defence of responsible journalism.

The trial judge rejected both defences, and awarded Mr. Hansen damages of $30,000. The Defendants appealed.

The following is the analysis of the Court of Appeal, applying the law as recently developed by the Supreme Court of Canada:

1. Did the trial judge err in rejecting the defence of statutory qualified privilege?

[24] The defence of statutory qualified privilege is set out in s. 4(1) of the Libel and Slander Act, the relevant parts of which state:
A fair and accurate report published in a public newspaper or other periodical publication ... of the proceedings of a public meeting ... is privileged, unless it is proved that the report or publication was published or made maliciously.


[26] The appellants thus had to establish the meeting of the DSU representative committee on April 19, 2006 was a public meeting, and the three articles were fair and accurate reports of the proceedings at that meeting.

[27] The trial judge found the appellants failed to prove any of those constituent elements of the defence. He found none of the articles reported the proceedings at the April 19 meeting ... because the meeting lacked the necessary quorum he concluded there was no meeting, public or otherwise ... and found the April 19 meeting ... did not fall within the statutory definition of a “public meeting”. Finally, he found the articles did not fairly and accurately report the events.

[28] The appellants attack each of those findings.


[29] The appellants first ... say the financial concerns of the DSU were matters of public interest. The meeting was not conducted in camera. There was no evidence the public or press were screened or barred from attending meetings of the representative committee. ... The appellants maintain that if the trial judge had properly weighed these facts, he would have found it was a public meeting.

[30] In McCartan Turkington Breen (a firm) v. Times Newspapers Ltd., [2000] 4 All. E.R. 913, [2001] 2 A.C. 277 (H.L.), the House of Lords considered whether the British equivalent of s. 4(1) afforded a defence where the publication reported on a press conference called by a private individual. They had no difficulty finding the general invitation issued to journalists to attend the press conference demonstrated a clear intent to widely disseminate information about what the organizers viewed as a matter of public concern, and the press conference was a public meeting.


[32] This is a very different situation from that in McCartan. Under the DSU bylaws attendance at meetings of the representative committee is restricted to “members of the Union”, who are Douglas College students. All present on April 19, with the exception of Mr. Parks, were members. No press were invited to the meeting. The fact attendees were not screened carries little weight since, as ... they all knew each other well. Nor is the evidence about who did or did not attend subsequent meetings helpful. The issue is whether the representative committee intended the ... meeting to be public. ...

[33] I am not persuaded the trial judge erred in finding the ... meeting was not a public meeting. ... there is a sufficient factual basis to support a finding that the representative committee did not intend the proceedings of that meeting to be communicated to a wider public.

[34] ... I also see no error in the trial judge’s conclusion that the three articles failed to fairly and accurately report the events. ... he correctly identified a number of inaccuracies ... the three most significant ...

[35] First, the trial judge properly criticized the appellants for inaccurately describing the ... report as a forensic audit when it was a forensic review. The difference is significant, and I agree that by describing the report as an audit, the appellants imported a high and unjustified level of reliability to (its) findings, and falsely implied the information in their articles had been objectively verified. In fact, the ... report contained significant errors ...

[36] Second, the second and third articles stated or clearly implied that (the) “audit” revealed possible or potential “fraud and misappropriation of funds” by Mr. Hansen. The trial judge properly found ... At no time did (the accountant) accuse Mr. Hansen of fraud or misappropriation of funds.


[38] ... the trial judge correctly found the third article did not reflect appropriate standards of fairness and accuracy.


2. Is the defence of responsible communication on matters of public interest available to the appellants?

[41] This defence developed from the defence of responsible journalism established by the House of Lords in Reynolds v. Times Newspapers Ltd. and Others, [1999] UKHL 45, [1999] 4 All E.R. 609, and Jameel and Another v. Wall Street Journal Europe SPRL, [2006] UKHL 44, [2006] 4 All E.R. 1279. When the trial of this matter took place the defence was just emerging in Canada. ... and appeals from ... decisions were making their way to the Supreme Court of Canada.

[42] The trial judge thus based his analysis of the defence on the framework adopted by the Ontario Court of Appeal in Cusson.


[46] Since his decision, the Supreme Court has delivered judgment in Quan v. Cusson, 2009 SCC 62, [2009] 3 S.C.R. 712, and Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640. These decisions accept responsible communication on matters of public interest as a new defence to defamation in Canada. While this defence closely mirrors that of responsible journalism, the Court chose the broader label to acknowledge the increasing role of online communication, as well as traditional journalism, in publishing material of public interest. It defines two elements in the test for responsible communication. First, the publication must be on a matter of public interest. Second, the defendant must show the publication was responsible, in the sense that he or she was diligent in trying to verify the allegations having regard to all the relevant circumstances. MacLachlin C.J., writing for the Court, summarized those circumstances at para.126 of Grant:

(a) the seriousness of the allegation;
(b) the public importance of the matter;
(c) the urgency of the matter;
(d) the status and reliability of the source;
(e) whether the plaintiff's side of the story was sought and accurately reported;
(f) whether the inclusion of the defamatory statement was justifiable;
(g) whether the defamatory statement’s public interest lay in the fact that it was made rather than its truth (“reportage”); and
(h) any other relevant circumstances.

[47] While that list is similar to the one established in Reynolds and employed by the trial judge, it is not identical. I agree with the appellants that this Court should consider the trial judge’s findings in the framework established by the Supreme Court in Grant.

[48] The first part of the test is met as the parties agree the three articles published by the appellants were on a matter of public interest.


[51] The appellants say since the trial judge did not have the benefit of Grant he inadvertently erred by considering the meaning of the defamatory comments too early in his analysis, and by selecting the most severe interpretation of the defamatory comments from a range of possible meanings. The appellants argue these errors coloured his analysis of the remaining factors, leading him to assess them too harshly and wrongly reject the defence of responsible communication.


[53] I am not persuaded there is substance to these complaints. First, nothing in Grant requires the fact-finder to consider the relevant factors in their listed order. Even if that were the case, the “seriousness of the allegation” tops the list ... Moreover ... the Court made it clear that the “logic of proportionality” requires that the seriousness of the allegation inform the degree of diligence required in verifying it. Thus, regardless of when the fact-finder considers the meaning of the comments, this aspect of the analysis must be examined in connection with other factors on the list.

[54] In determining whether the trial judge properly considered the range of reasonable meanings of the comments, it is important to note the focus of this analysis is the defendants’ intended meaning. In Bonnick v. Morris and others, [2002] UKPC 31, [2003] 1 A.C. 300, the Privy Council decided the “single meaning” rule, used to determine whether a statement is defamatory, should not be applied in considering whether the defence of responsible journalism has been established...

[55] In Grant the Supreme Court adopted this aspect of Bonnick...

[56] Here, ... neither Mr. Harder nor Mr. Tilley was asked about the meaning they intended to convey by the defamatory comments...

[57] The trial judge considered the meaning of the comments at several junctures. He initially examined this in deciding whether the comments were defamatory. ... at that point ... it is appropriate for the fact-finder to determine a single meaning of the words. The trial judge’s findings at that stage are set ... I am satisfied the comments reasonably bear the meaning he ascribed to them, with one exception. ... I agree with the appellants that there was ambiguity in the first article as to when (money) was repaid, and the less serious interpretation, that the funds were repaid two weeks after they were borrowed, should have been adopted by the trial judge. I am not convinced, however, that this played a significant role in his analysis.

[58] The trial judge ... examined the seriousness of the allegation and the tone of the articles (and) found they contained allegations “of a most serious nature”, and their tone was that Mr. Hansen had committed criminal actions founded in fraud and misappropriation leading to his being “busted”, as reflected in the third article. The appellants say the trial judge erred in taking the most serious view of the defamatory statements, and failing to acknowledge they could also be interpreted as suggesting Mr. Hansen was merely under investigation.

[59] ... I am not satisfied, however, that consideration of that alternative meaning substantially reduces the standard of responsible communication required to establish the defence. Mr. Hansen had spent his entire career in financial management of post-secondary educational institutions. Statements that police are investigating him for suspected fraud and misappropriation of funds are properly characterized as serious allegations. The ... had a duty to responsibly investigate and confirm those statements before publication. ... the use of the word “busted” in the headline of the third article could properly be interpreted as indicating the police had moved beyond the investigatory stage and had charged or arrested Mr. Hansen. ...

[60] The appellants’ second ... is that he gave too much weight to “minor” flaws in the ... report that were repeated in the publications ... The appellants point out that ... in his letter of (correction, the accountant) stated the corrections did not change his conclusion that there were significant problems ... under Mr. Hansen’s stewardship.

[61] ... this argument fails to appreciate the difference between the (of the) erroneous comments about Mr. Hansen and the context in which they were published. ...The appellants ... used (the) erroneous comments as the basis for allegations of potential fraud and misappropriation ... and gave them heightened reliability by wrongly describing them as the product of a forensic audit. In that context, I see no error in the trial judge’s assessment ...

[62] The appellants next criticize the trial judge’s treatment of the reliability and status of their primary sources...

[63] ... the trial judge found the appellants’ information came from his “flawed forensic review”, and was critical of Mr. Tilley for failing to ... make any attempt to verify the information in the ... report, and explore the difference between a forensic review and a forensic audit.


[65] ... it is not possible to say what would have transpired had Mr. Tilley tried ... but I am not persuaded the trial judge erred in finding he should have done so... I see no error in the trial judge’s view that the standard of responsible journalism required the appellants to discern the import and reliability of a forensic review in contrast to a forensic audit ... I agree with the trial judge that characterizing the report as an audit gave it an undeserved reliability. ... there were other sources at the DSU whom Mr. Tilley could and should have contacted to verify the circumstances ... that were the focus of the allegations ....

[66] ... The appellants argue ... Further, it is common and necessary for journalists to rely on second-hand information. Court-established certainty in reporting matters of public interest is not required.

[67] The trial judge ... dealt with the information ... finding Mr. Tilley was unable to confirm a police investigation when he contacted the police, and relied instead on second-hand information. ...


[69] Mr. Tilley tried to verify the investigation by speaking to the police and Nicole. Neither would confirm it. He then spoke to ... one of the DSU student representatives from the anti-Hansen faction, who confirmed the RCMP had called her and said an investigation would take place.

[70] I agree with the appellants the trial judge was wrong in saying there was no evidence to support the allegation of a police investigation. The question remains, however, as to the reliability of Mr. Tilley’s sources on that point, and whether the steps he took to verify their information were sufficiently diligent. ... there was a sufficient evidentiary basis on which the trial judge could find (the source's) views on those matters were not entirely objective, and Mr. Tilley should have sought verification of the police investigation from more neutral sources.

[71] The appellants next argue the trial judge erred in finding their efforts to contact Mr. Hansen and get his side of the story before publication lacked the expected diligence and balance of a responsible journalist.

[72] The trial judge ... found Mr. Tilley’s efforts to contact Mr. Hansen were limited to leaving email and voicemail messages for him at the DSU office. Mr. Tilley could provide no details of these messages, and Mr. Hansen said he did not receive them. The trial judge noted Mr. Tilley did not attempt to locate Mr. Hansen at his home although he had the means to do so. He also observed the third article stated Mr. Hansen was not available for comment, yet Mr. Harder was at a meeting with him in June before that article was published and had not bothered to speak to him.

[73] The appellants point out Mr. Tilley also asked Mr. Hansen’s supporters for his contact information, which they refused to provide. As well, the third article included part of Mr. Hansen’s side of the story, stating he said “he was entitled to the money as a result of outstanding overtime and other payroll issues” (and) say these steps, together with the messages left for Mr. Hansen at his office, were sufficiently diligent to meet the standard of responsible communication.


[75] I am satisfied there was a proper evidentiary basis for the trial judge’s finding that the appellants failed to demonstrate the required standard of diligence ... both Mr. Tilley and Mr. Harder testified they recognized their journalistic obligations required them to make every effort to contact Mr. Hansen and obtain his side of the story, given the serious allegations in the articles. Yet Mr. Tilley’s only attempt to do so involved leaving messages for Mr. Hansen at the DSU office, after his position there had been terminated. Moreover, Mr. Tilley ... agreed he may only have tried to call Mr. Hansen once at the DSU before May 8, and was unsure if he tried to email him there before the first article was published. He claimed he had “exhausted all options” to contact Mr. Hansen when the second and third articles were published, yet could not say what further efforts he had made to reach him. Finally (he) agreed he was aware of Mr. Hansen’s explanation for the $20,000 cheque very early on ... yet he did not include it in the first two articles ... the trial judge properly found the appellants’ efforts to obtain Mr. Hansen’s side of the story were inadequate.

[76] Finally, the appellants argue the statements about Mr. Hansen in the three articles were reportage and thus do not attract liability. The Supreme Court discussed reportage as an exception to the repetition rule ...

[77]... I am not satisfied the Supreme Court’s affirmation of the reportage exception assists the appellants. The three articles did not indicate their truth had not been verified. Nor did they fairly set out both sides of the dispute.

[78] In my view, the findings of the trial judge, re-examined in the framework established in Grant, properly lead to the conclusion that the defence of responsible communication on matters of public interest is not available to the appellants.