Sue me and I'll sue you

By Mindy Paskell-Mede
Illustration: Cathy Pentland

When you think a complaint is wrongfully aimed at you can you countersue for damages for loss of reputation?

Acountants who have received complaints, either in the form of demand letters, lawsuits or disciplinary complaints, frequently ask whether they have any recourse against the complainant for defamation. Very often ten the recipient of a complaint not only feels he or she did no wrong, but also feels the complainant was the author of his or her own misfortune. Often, that is the case and if so a defence of contributory negligence is recommended. However, countersuing for damages is an entirely different matter.

In Quebec, where the rules are a bit different than in the rest of the country, one cannot simply conclude that such an action, seeking damages for loss of reputation, is unavailable. However, the rules in Quebec are such that sustaining a claim in defamation would be extraordinarily difficult (much more difficult than defending the threatened or actual action in damages against the accountant), and therefore might not be the wisest course of action.

To better understand why it is difficult in Quebec to sue a complainant for defamation and impossible in common-law jurisdictions where the rule of absolute immunity applies, consideration of the recent BC Court of Appeal decision in Hung v Gardiner 2003 BCCA 257, 13 B.C.L.R. (4th) 298, is helpful. Although Quebec law does not include a rule of absolute immunity, the policy considerations as explained by the British Columbia Court of Appeal are not very different from the thinking of Quebec courts, which demand evidence of bad faith (as opposed to mere pig-headedness) to sustain an action for malicious prosecution or other similar actions for damages against plaintiffs.

In the BC case, the director of ethics of the Institute of Chartered Accountants of British Columbia (ICABC) was the complainant. The institute had conducted an investigation into the conduct of the appellant, who was not a member of the institute, but instead, a member of the Law Society of British Columbia and of the Certified General Accountants Association of British Columbia.

At the relevant time, however, she was an employee of a firm of CAs and her conduct had been examined in the context of an investigation of her supervisor.

After considering the file, members of the Professional Conduct Inquiry Committee of the ICABC decided both professional bodies of which the appellant was a member should be told of her conduct. As a result, Brian Gardiner, the director of ethics for the ICABC at the time, sent a copy of the investigative report to the Law Society of BC and the Certified General Accountants Association of BC. Both those professional bodies decided not to take any further action against the appellant.

The appellant was nevertheless aggrieved that the investigation report had been sent to the governing bodies of her professions. She sued Gardiner for defamation, malicious prosecution, negligence, breach of confidentiality, breaches of the various statutes, breach of public office duties, invasion of privacy and conspiracy. The appeal decision deals with the summary dismissal of that action, on the basis that Gardiner, as a complainant in a disciplinary process, enjoyed absolute immunity from lawsuits of this nature.

The Court of Appeal began by restating the general rule of immunity recognized in the common law. "No action will lie for defamatory statements contained in a document properly used in the course of any proceedings before a court of justice or tribunal recognized by law."

The Court of Appeal explained the rationale behind the general rule. Although there is recognition that the individual about whom a complaint has been made has an interest in defending his or her reputation, the court indicated that there is another, greater public interest that must outweigh the individual interest in this case. In order for a proper and effective administration of justice, complainants must enjoy freedom of speech without fear of consequences. In the context of balancing these interests, the courts will recognize the immunity only when the citizen who is complaining is doing so in a confidential way to the body created by statute. Therefore, repeating one's allegations in the press or on a public website, if this otherwise constitutes defamation, is not eligible to be protected by the immunity rule regarding litigation.

The court also observed that the right to engage in professional activities is subject to the rules governing those activities, which can not be enforced without a corresponding right enjoyed by the public to complain without fear of reprisal. According to the British Columbia Court of Appeal, living with the consequences of what might otherwise be defamatory statements is a small price for a professional to pay for the entitlements that come with a professional designation.

The plaintiff in this defamation case argued that this rule of immunity did not apply because ultimately the Law Society of British Columbia and the Certified General Accountants Association of British Columbia decided not to commence disciplinary proceedings against her. There fore, she argued, the immunity attaching to disciplinary proceedings did not apply. In fact, the process had never gone beyond the complaints committees, not even reaching the disciplinary committees of her two professional governing bodies. The complaints committee does not have the same status in law of a quasi-judicial tribunal as does the disciplinary committee.

The British Columbia Court of Appeal disagreed, observing that the complaint is the necessary first step in the disciplinary process. The court held that the legislature could not have intended to divide the system with the result desired by the plaintiff.

The court also explained the distinctions it was drawing between the case before it and other cases in which defamation suits were allowed to proceed. For example, if the complainant had directed his or her complaint to the wrong body, or if a letter of complaint addressed to the correct disciplinary body was copied to another association that didn't have disciplinary powers, those extraneous letters or copies wouldn't be protected and defamation suits could lie in their regard. Similarly, if a complainant gives information to police, an absolute immunity wouldn't apply because a police force is an investigative body and doesn't have the decision-making powers of a quasi-judicial body.

Therefore, because both the Law Society of BC and the Certified General Accountants Association of BC are quasi-judicial bodies that have the power to determine the legal rights and affect the status of their members, a complaint made to them in a confidential way concerning a member's conduct enjoys an absolute immunity. Such an immunity would be of little value if it only applied where the recipient of the complaint decided to lay charges or if it only applied to actions in defamation, but not to the other causes of action claimed by the plaintiff.

To sum up, courts are very protective of their right and rights of similar tribunals to entertain complaints of aggrieved citizens and will not easily permit an escalation of the "if you sue me I'll sue you" type.

Mindy Paskell-Mede, BCL, LLB, is a partner with Montreal law firm Nicholl Paskell-Mede. She is technical editor for Law.