A recent decision of the Court of Queen's Bench in Alberta highlights the costs consequences of litigating civil actions in Canada in the context of a defamation action involving a self-represented plaintiff who was forced to proceed to trial in order to obtain public acknowledgement that the article in question was defamatory. In Kent v Postmedia Network Inc,(1) following a five-week trial in two defamation actions, the plaintiff obtained a damages award of C$200,000 and recovery of trial costs in the amount of C$250,000.
Former journalist Arthur Kent was a candidate running in the Alberta provincial general election. He brought two defamation actions for damages arising out of an article about his campaign published in several Canadian newspapers. The plaintiff characterised the article as a "hit piece" that was designed to sway voters. About three weeks after the article was published, the election was held and the plaintiff came second.
Following a 22-day trial, the court found that certain factual statements in the article were defamatory and that:
"the overall tenor of the Article is that Arthur Kent is a politically naïve arrogant has-been journalist with a huge ego whose election campaign is in disarray and who is doomed to become an ineffective [member of the Legislative Assembly] if elected."
While the court found that the defendants had established the defence of fair comment to defend the comments in the article, some of the factual statements were found to be defamatory and not defensible. In awarding the plaintiff C$200,000 in total damages, the court noted that the damages reflected the "incremental damage" to the plaintiff and his reputation arising from the article, and that the plaintiff had suffered significant distress which entitled him to more than nominal damages. The court also took into account certain exacerbating factors, such as the reporter's conduct, lack of editorial oversight and the tone of the article.
In determining the costs award, the court noted that while the plaintiff was only partially successful in his actions and the damages awarded were a small fraction of the amount claimed (amounting to less than 2% of the C$10.5 million total claimed), the plaintiff's only option to obtain public acknowledgement that the article was defamatory was to proceed to trial, as the defendants never offered to retract or correct the article and continued publishing it online for another four years. Both sides were found to be responsible for the overall delay and each side was to blame for certain conduct that affected the costs award equally. On the one hand, the defendants failed to provide key documents by later asserting journalist-source privilege without a reasonable basis; on the other hand, the plaintiff made several unfounded allegations of misconduct against the defendants.
The first interesting aspect of the costs decision is the court's findings on whether three settlement offers constitute a 'formal offer' under the Alberta Rules of Court in order to trigger the costs consequences set out in the rules.(2) Generally, if a defendant makes a formal offer to settle that is not accepted and a judgment is made that is equal to or more favourable to the defendant than the offer, the defendant is entitled to costs for all steps taken in the action in relation to the action after service of the offer.
In Kent the defendants had served three settlement offers. At first glance, these appear to be favourable to the plaintiff when compared to the ultimate outcome at trial and ought to be taken into account in reducing the costs recoverable by the plaintiff. However, the court disagreed. The court did not view the first offer, in the amount of C$150,000 plus costs up to C$50,000 payable by all the defendants in one of the actions – four of whom were later let out of the action on summary judgment – as more favourable than the judgment in the one action of C$150,000 plus interest. The second offer, under which the defendants offered to take steps to remove the article from the newspapers' website in exchange for a discontinuance, did not mention costs at all and was not found to meet the requirement of a formal offer. The third offer, in the amount of C$325,000 all-inclusive to settle both actions, required the plaintiff to waive his right to accept the offer by filing it and his acceptance; again, this was found to be inconsistent with the rules and did not qualify as a formal offer.
The second interesting aspect of the costs decision is the significance that the court placed on the inclusion of non-monetary terms in the settlement offer for it to be taken into consideration in the amount of costs. Even if a settlement offer is not found to constitute a formal offer under the rules, courts often consider such offers as a relevant factor in determining costs. While the court noted that the three non-formal settlement offers could still be a relevant consideration when making a costs award, it specifically found that the following factors caused it not to consider them for the purpose of reducing costs:
- The offers contained no acknowledgement that the article contained any errors;
- The offers did not contemplate a retraction or apology;
- The offers provided no opportunity for the plaintiff to respond to the article; and
- The offers contained no commitment to remove the article from the website.
The court held that these factors "clearly went to the heart" of the plaintiff's claim and in the context of this defamation action, it would:
"not be reasonable to penalize Mr. Kent in costs for failing to accept a settlement offer that did not provide him with some form of the public vindication he was seeking and which he ultimately had to obtain through the trial process."
Although generally self-represented litigants do not receive costs, the court found that the case was an exception (and noted that the plaintiff was represented by counsel for much of the litigation). In arriving at the total amount of C$250,000 for costs payable by the defendants to the self-represented plaintiff in a partially successful defamation action, the court included certain taxable costs for steps taken in the litigation plus disbursements, and then "adjusted upwards" to reflect the results and complexity of the proceedings. The decision in Kent not only reflects the discretionary powers of the trial judge in calculating costs to the successful party in a defamation action, but also highlights the need for defendants in defamation actions to carefully consider all the terms (and form) of any settlement offer delivered before embarking on the expensive trial process.
For further information on this topic please contact Carlos P Martins or Tae Mee Park at Bersenas Jacobsen Chouest Thomson Blackburn LLP by telephone (+1 416 982 3800) or email (firstname.lastname@example.org or email@example.com). The Bersenas Jacobsen Chouest Thomson Blackburn website can be accessed at www.lexcanada.com.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.