Half A Million Is Too Much For Defamation

In a recent decision on a defamation claim, the Manitoba Court of Appeal ("MBCA") reduced a $500,000.00 jury award by 90 percent, deeming it "wholly disproportionate and shockingly unreasonable."¹

While there has been no 'cap' set for general damages for defamation in Canada, an award in excess of $250,000 for general and aggravated damages in a defamation lawsuit is highly unusual, if not unheard of. As Justice of Appeal Burnett remarked in the introduction to Chartier v Bibeau, "civil jury trials in Manitoba are rare. Awards for defamation in that amount are virtually non-existent."²

Facts

The plaintiff, Marcel Chartier, was a commercial real estate broker and developer. He and the defendant, Serge Bibeau, were friends and business partners. In fact, Bibeau's returns on previous investment deals with Chartier were estimated to be somewhere between $10 and 20 million.

In 2009, Chartier and his son presented a new investment opportunity to Bibeau: the development of a Winnipeg property that would become home to a 400,000-square-foot IKEA store. The three men would each contribute $1.25 million and share equally in the profits or losses. Bibeau entered into the deal as a silent partner, having no input into the strategic management of the venture. The project went ahead, and IKEA Winnipeg opened in late 2012. In 2015, the Chartiers and Bibeau met to discuss the status of the investment and the distribution of the profits. Bibeau was dissatisfied with the financial disclosure provided to him. He also disputed a "marketing fee" that was later refunded to him. Ultimately, Bibeau recouped his initial investment plus an additional $2.67 million in profits. One might wonder what exactly he had to complain about at this point.

The following year, Bibeau met with the account manager of a local credit union, and told the manager that Chartier and his son had stolen money from him. He "might" have called them thieves. It does not appear that the Chartiers suffered any reputational or economic harm as a result of these comments, and they did not advance any such claims.

In 2017, Bibeau met with one of Chartier's business acquaintances and his son at a restaurant and repeated the story that he had told to the credit union account manager: the Chartiers had stolen money from him, and they were thieves. The comments do not appear to have spread beyond the three people in the restaurant, nor were they publicized. The individual to whom they were made continued to invest with Chartier.

Chartier could not point to an actual financial loss that had resulted from Bibeau's defamatory comments, but he argued that they had generally affected his reputation in the business community. He argued that the comments negatively affected his health and were personally distressing, though the decision does not contain mention of any evidence that was led with respect to these alleged damages. Nevertheless, the jury saw fit to award Chartier $500,000.00 for the intangible harm that Bibeau's comments had caused him.

The Appeal

Bibeau appealed the quantum of the jury award (although not the jury's determination that he had defamed Chartier). Bibeau's counsel argued that an award in the range of $500.00 to $5,000.00 would be more appropriate.

Despite his apparent success with the jury, Chartier cross-appealed the decision not to award punitive damages in addition to the $500,000.00 in general and aggravated damages. He submitted that an additional award of $1 million would be appropriate in light of Bibeau's intentional defamation. He also argued that the $500,000.00 award was "appropriate in the circumstances, as the jury was entitled to take into account the outrageous conduct of the defendant up to and at trial."³ Both parties made unsuccessful bids to introduce fresh evidence at the appeal.

In its decision, the MBCA referred to the defamatory statements made by Bibeau as "utterly false" and very serious. Certainly, the negative comments could have dissuaded potential investors from entering into future deals with the Chartiers. Still, the facts were not sufficiently compelling to attract an award of $500,000.00, according to the MBCA. Neither plaintiff nor defence counsel pointed to any legal precedent justifying such a high number. The MBCA said that it considered more than 50 past cases where damages were awarded for reputational harm and determined that the $500,000.00 award was well beyond the "maximum limit of a reasonable range."⁴ The MBCA reduced the award to $50,000.00. While this is a far cry from $500,000.00, it is on the higher end of the spectrum of defamation awards for only reputational harm.

Not surprisingly, Chartier sought leave to appeal the decision to the Supreme Court of Canada. The application for leave was dismissed, with costs.⁵

Takeaways

While it might never attract a half-million-dollar award, defamation can certainly be costly. If Bibeau had concerns about the Chartiers' handling of his investment, then there were legal remedies available to him without resorting to defamation. While Bibeau was spared from having to pay a $500,000.00 penalty for what may have amounted to baseless gossip that did not cause Chartier to lose any identified or known business, consulting a lawyer when he thought something was amiss probably would have been less costly than the years of legal proceedings that followed.

This is also a case where the involvement of a jury appears to have benefited the plaintiff. It seems surprising for a significant amount of money to be awarded to a plaintiff who appeared to already be extremely well off, especially when he did not lead evidence of any quantifiable financial loss. We cannot know what contributed to this - perhaps the jury felt that a small reputational impact on such a well-off businessman could have a large financial impact, or perhaps the jury felt that Chartier was an extremely sympathetic witness, with Bibeau presenting poorly or his comments offending them.

Since juries do not have to provide written reasons for their decisions, we will never know what led them to agree on such a large award. It is a cautionary tale for defendants facing a jury trial and potentially an informative one for a plaintiff seeking damages for defamation deciding whether to request a jury.

Footnotes

1. Chartier v Bibeau, 2022 MBCA 5 (CanLII) at para 46.

2. Ibid at para 1.

3. Ibid at para 35.

4. Ibid at para 48.

5. Marcel Chartier v Serge Bibeau, 2022 CanLII 78983 (SCC).

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