Hay v. Platinum Equities Inc., 2012 ABQB 204

Court of Queen ’ s Bench of Alberta Citation: Hay v. Platinum Equities Inc., 2012 ABQB 204 Date: 20120328 Docket: 0501 05114 Registry: Calgary Between: Owen H. Hay and Owen H. Hay Professional Corporation Plaintiffs - and - Platinum Equities Inc., Sri H. Chandra, David Humeniuk Defendants _______________________________________________________ Reasons for Judgment of the Honourable Mr. Justice C.S. Brooker _______________________________________________________ Introduction

[ 1 ] This is an action for defamation and appropriation of personality arising out of the preparation, delivery and use of review engagement reports (“RERs”) purportedly prepared and signed by the plaintiff chartered accountant for the defendant company who in turn submitted the RERs to a bank in support of its application for financing.

Thereafter, the RERs were determined to be forged, the application to the bank was withdrawn, and the situation reported to the Institute of Chartered Accountants of Alberta, independently, by both the plaintiffs and the defendant corporation. [ 2 ] The defendants filed statement of defences to the claims. [ 3 ] The defendant corporation counterclaimed against the plaintiffs as well as the defendant Humeniuk and a Virginia Glover. The counterclaim seeks damages based on loss of reputation, defamation and injurious falsehood all based on an alleged conspiracy by the defendants by counterclaim.

It does not appear that Glover was ever served. The other defendants by counterclaim filed defences to the counterclaim. [ 4 ] On October 18 th , 2006 a Consent Dismissal Order was granted by Hillier J. dismissing the counterclaim as against the plaintiffs. [ 5 ] There have been a number of amendments to the pleadings which will only be referred to as necessary. [ 6 ] At trial the plaintiffs were represented by counsel as was the corporate defendant and the defendant Chandra.

The defendant Humeniuk was not represented at trial and only appeared as a witness called by the other defendants. [ 7 ] The only witnesses at trial were Owen Hay, Ron Olson, Shariff (“Sri”) Chandran, Vincent Chok and David Humeniuk. There were nine exhibits entered. Exhibit 1is a “Statement of Agreed Exhibits” and contains the agreement as to the use of the exhibits. It is not signed by Humeniuk and therefore is not binding on him. Facts [ 8 ] Owen H. Hay (“Hay” or “plaintiff”) became a chartered accountant in 1969 in Ontario. He came to Alberta in 1979.

He is a member of the Institute of Chartered Accounts of Alberta (“ICAA”). In 1982 he went into private practice in Calgary. His practice is an all-round one and includes reviewing financial statements and preparing RERs, audits, estate planning and tax work. He practices through a professional corporation, Owen H. Hay Professional Corporation (the “professional corporation”) — the co-plaintiff in this action. [ 9 ] Platinum Equities Inc. (“Platinum”) is a commercial real estate syndication corporation incorporated in 2003.

In September 2005 it was attempting to close a property purchase and needed quick financing to close the deal. [ 10 ] Shariff Chandran,(“Chandran”) described as “Sri Chandran” in the style of cause, is the president and C.E.O. of Platinum and holds eighty per cent of its common shares. [ 11 ] Vincent Chok (“Chok”) was the chief operating officer of Platinum from 2003 until 2007. [ 12 ] David Humeniuk (“Humeniuk”) was an employee of Platinum. He was described as “chief marketing officer” of the management team [1] . He had previously worked for a major bank as a mortgage broker.

He was aware of what financial information a bank would require for financing. On November 2, 2005 Platinum terminated Humeniuk for cause. That resulted in a wrongful dismissal action which was ultimately settled.

[ 13 ] In September 2005 Platinum was considering the purchase of a commercial property. It needed financing to close the deal. The financing had to be obtained quickly as there was a quick closing date. Platinum decided to obtain the financing through the Royal Bank of Canada ( the “bank”). It was to be Platinum’s first application for financing with the Royal Bank. Chok was the main contact between Platinum and the Royal Bank. Mr. Murphy was the person who deal with the application on behalf of the bank.

Chok was responsible for putting the financing package together to submit to the bank. [ 14 ] In order to consider the application for financing, the bank requested Platinum’s financial statements for the previous as well as the current year and RERs with respect thereto.

Chandran asked Philip Pincus (“Pincus”) who had an extensive accounting background and was in the process of transferring over to Platinum, to prepare the financial statements, which he did. [ 15 ] Chandran approached Hudson and Company about preparing the RERs but was told that it would take that company between six weeks and two months to complete that assignment. Platinum did not have that much time. Chandran asked Humeniuk to source a firm that could prepare the RERs in the time frame available and Humeniuk indicated that he knew someone who could provide RERs in a short period of time.

Chok and Chandran agreed that Humeniuk would take care of obtaining the RERs and financial information required by the bank. [ 16 ] Thereafter, Pincus prepared financial statements which were sent to Chandran and he forwarded them to Humeniuk [2] . [ 17 ] Humeniuk, both in his pleadings and as a witness at trial, denied that he had forged the RERs. He acknowledged that he had been tasked by Platinum to obtain the necessary RERs with respect to the financials of Platinum which were required by the bank. He testified that he knew a lady by the name of Virginia Glover who he thought could obtain the necessary RERs.

He testified that he met Glover at a Dennys Restaurant and gave her the financials and that he met her there again — he does not recall when — and received the completed RERs and financials. Humeniuk gave Chok a package of materials [3] and Chok had this material sent to Murphy at the bank [4] . [ 18 ] Humeniuk admitted that he knew Owen H. Hay because he had dealt with him and his company several years prior when operating a company called Power Mortgage.

At that time, Hay had done some accounting work for Power Mortgage, including preparing RERs. [ 19 ] I will detail and comment on Humeniuk’s evidence later in these reasons. [ 20 ] Shortly thereafter, Chok testified he received a telephone call from Murphy who advised that he had spoken to Hay who denied having prepared the RERs. Murphy described the RERs as “fraudulent RERs”.

Platinum withdrew its application for financing with the bank. [ 21 ] Hay testified that on September 16 th , 2005 he received a telephone call from Michael Murphy of the Royal Bank of Canada inquiring about an RER issued by Hay with respect to Platinum. He did not recognize Platinum as a client and had Murphy fax a copy of the RERs. Hay testified, and I accept, that he did not sign the RERs in question, nor did he prepare them nor instruct anyone else to prepare them or to sign them on his behalf. Further, he did not authorize anyone to use his name for these. No one suggested otherwise at trial.

I am satisfied on the evidence that these RERs were forgeries and that Hay had nothing to do with their preparation or signing. [ 22 ] Hay, quite naturally, was very concerned about the fraudulent RERs issued in his name. He called the ICAA to report the matter on September 16 th , 2005 and as well wrote to the Institute’s claim adjuster a few days later [5] . [ 23 ] On September 27 th , 2005 Hay’s solicitors wrote a demand letter to Platinum [6] . Thereafter there was a series of correspondence between Hay’s solicitors and Platinum’s solicitors [7] .

On October 20 th , 2005 the Hays issued their statement of claim and served it on Platinum’s solicitors.

[ 24 ] On October 24 th , 2005 Platinum wrote to the ICAA asking it to investigate this matter [8] . [ 25 ] On November 22, 2005 Platinum filed its statement of defence as well as a counterclaim against the Hays as well as Glover and Humeniuk alleging that the defendants by counterclaim had conspired to injure Platinum. Issues [ 26 ] The evidence and written submissions of counsel raise the following major issues for determination: 1. Were the RERs that were submitted to the bank, forged documents? 2. If so, who forged the documents? 3.

Were the Hays defamed as a result of the submission of the RERs to the bank? 4. Were the Hays defamed as a result of Chandran and Platinum’s letter of October 24, 2005 to the ICAA? 5. Did the preparation and submission to the bank of the forged RERs under the Hays name and signature constitute the tort of appropriation of personality? 6. What, if any, damages are the Hays entitled to? 7. Is Platinum vicariously liable? 8. Is the counterclaim made out? 9. Costs Analysis 1. Were the RERs that were submitted to the bank forged documents? [ 27 ] Hays denied preparing or signing the RERs.

The evidence surrounding the old address for Hays which appeared on the RERs together with the absence of a telephone number augers against the validity of the RERs. Indeed, no one suggested at trial that the RERs were genuine. I accept, in particular, Hay’s evidence that he did not prepare nor sign the RERs in question. I am satisfied that the RERs were not genuine. They were forged documents. 2. If so, who forged the documents?

[ 28 ] Humeniuk , in testifying, denied that he forged the RERs . He suggested that Virginia Glover must have done it. He testified that he had been introduced to Glover by an accounting friend and had known her for about two years prior to 2005. He had met Hay a couple of times and that Hay and his company had provided Power Mortgage, with whom Humeniuk was associated at the time, with RERs. He described meeting with Glover at a Denny’s and giving her the Platinum financial for which he required the RERs.

Subsequently, he testified that he meet with Glover at the same Denny’s and received from her the financials with the RERs. He further testified that he did not know that Hay had not signed the RERs until he was so advised by the bank. When Humeniuk was first confronted by Chandran and Chok about the fraudulent RERs he did not mention Glover at all.

It was not until later that he brought up her involvement. [ 29 ] Humeniuk further testified that it took more than two business days to complete a RER and that he knew that when he received the RERs with Hay’s signature on them but that at that time he simply did not think about it. [ 30 ] Humeniuk was cross-examined extensively on the photocopies of two cheques which he had produced in answers to undertakings from Questioning [9] . These cheques were produced by him as evidence that he had, through his company, Power Mortgage, paid fees to Virginia Glover.

Cheque # 0440 is payable to Virginia Glover in the sum of $1500 and is signed by Humeniuk. Cheque # 0772 is payable to Virginia Glover in the sum of $2225.60. Both cheques were drawn on Power Mortgage’s account at First Calgary Savings. Official copies of the original of these cheques processed through or on behalf of First Calgary Savings were introduced as Exhibits 2 and 3. The front of these two exhibits are identical to the front of the two cheques produced by Humeniuk as part of Exhibit 7, except that Exhibit 2 is payable to Linda Humeniuk and Exhibit 3 is payable to Lee Professional Services Ltd.

On the reverse of the cheques found in Exhibit 7, it appears that on cheque #0772 an account number as been blacked out and it appears on the other cheque, #0440 some of the markings on the reverse are missing. [ 31 ] Humeniuk admitted that it was his handwriting on the front of all of these cheques but denies that he altered the originals. He has no explanation for the difference in the name of the payee.

He denied having altered the cheques he produced in Exhibit 7. [ 32 ] Humeniuk admitted that he had in his possession at the time of these events, copies of the RERs which Hay had prepared for Power Mortgage several years previous to 2005. [ 33 ] I do not find Humeniuk to be a credible witness. I do not accept his denials. I conclude that he either created the forged RERs by “cutting and pasting” from the Hay’s RERs he had relating to Power Mortgage; or, he was a party to someone else doing so with his knowledge and assistance.

I reach this conclusion for a number of reasons. [ 34 ] First, Humeniuk was not unsophisticated in financial matters [10] . He had extensive experience in banking. He had run his own company, Power Mortgage and had obtained RERs for it. He knew that a CA could not prepare a RER in two business days and yet he accepted that that had been done here. His explanation that he just did not think about that when he received the RERs under Hay’s signature is not credible. [ 35 ] Second, Humeniuk does not recall the name of Glover’s employer or phone number.

Yet he says he phoned and spoke to her employer shortly after the RERs were found to be fraudulent. However, he cannot recall who it was he spoke to. That excuse is too convenient. I do not believe him. [ 36 ] Third, Humeniuk’s story or explanation about what had happened has not been consistent. When he was first confronted by Chandran and Chok on September 16th, he did not mention Glover at all. Indeed, he said he would contact Hay. Yet in his letter to McCarthy Tetrault [11] outlining what happened he says: When we required financial statements and Mr.

Chandran asked if I knew of anyone that would be able to deal with them relatively quickly I suggested Ms. Glover. ... [ 37 ] Fourth, Humeniuk’s voice mail message to Hay of October 5 [12] demonstrates that he knew much more than he admits and in fact demonstrates to me a guilty mind. In part his voice message says:

Mr. Hay, it’s Dave Humeniuk. We have a problem. ...And I’m personally responsible for this situation that — that has arisen, and I would like to get it resolved. ... I — I need to talk to you about this. We need to resolve it. You know, I am quite willing to compensate you, and I guarantee you it never will happen again. And I guess I would have to pay your legal fees as well, ... [ 38 ] How Humeniuk can guarantee that it would never happen again if, as he contends, he did not do it, is impossible to understand.

And why he would be willing to compensate Hay, including paying his legal fees, is difficult to reconcile if, as Humeniuk suggests, he had not been involved in the forgery. [ 39 ] Fifth, he admitted that he lied on Questioning. [ 40 ] Sixth, his evidence concerning the two cheques which he said he wrote payable to Virginia Glover is not believable. Clearly the originals of these cheques have been altered from the original payees to substitute Virginia Glover as the payee. Humeniuk admits it is his handwriting.

He can offer no explanation for the discrepancy between the original cheques and the copies of the same which he provided in answer to his undertaking. He is the only one who would have a reason to make such an alteration. I am satisfied he did so. 3. Were the Hays defamed as a result of the submission of the RERs to the bank? [ 41 ] The plaintiffs allege that they were defamed as a result of the forged RERs having been submitted to the bank. They suggest that the financial statements attached to the RERs were not prepared in accordance with generally accepted accounting principles (“GAAP”).

Specifically, they argue that the inclusion of $27 million dollars in assets in the Consolidated Balance Sheet [13] was improper or at least not in accordance with GAAP. [ 42 ] There are three elements to the tort of defamation: (1) that the words complained of are defamatory; (2) that the words complained of refer to the plaintiff; and (3) that the words complained of were published to a third person. [14] [ 43 ] A defamatory statement is one which has: ...A tendency to injure the reputation of the person to whom it refers, which lowers him in the estimation of the right thinking members of society, and in particular which causes him to be regarded with feelings of hatred, contempt, ridicule, fear, dislike or disesteem ...The real test is: Would the words tend to lower the Plaintiff in the estimation of right thinking members of society generally? [15] [ 44 ] The essence of the plaintiffs position on the issue of defamation through the RERs submitted to the bank, appears to be that they were defamed by innuendo, that the RERs stated that the financial statements were prepared in accordance with GAAP when, in fact, they were not and consequently the false RERs implied that the plaintiffs had falsely or negligently prepared the RERs resulting in the implication that the plaintiffs were either dishonest or incompetent as chartered accountants. [16] [ 45 ] I note at the outset that the plaintiff corporation is not a chartered accountant.

It is simply the corporate vehicle which Mr. Hay uses to practice his profession as a chartered accountant. Given the basis of Hay’s complaint as summarized in the preceding paragraph, if any defamation occurred it was against Mr. Hay — not independently against his professional corporation. [ 46 ] There is not doubt on the evidence that the second and third elements of the tort of defamation have been proved. They were not really disputed. The words complained of do refer to the plaintiff Hay and they were published to a third person given that they were

sent to Murray at the bank. [ 47 ] However, I am not persuaded on the evidence that the words are defamatory. No expert evidence was lead to show that the financial statements (which had been prepared by Phil Pincus of Platinum) attached to the RERs were not in accordance with GAAP. or that the RERs and financial statements themselves were fraudulent. The appropriateness of including the $27 million in assets on the Consolidated Balance sheet seems to have been the subject of a difference of opinion between the parties but there is no independent expert evidence on the point.

Pincus did not think it relevant but Platinum wanted it included. Note 3 to the Consolidated Balance sheet explains the item. The limited evidence before me does not satisfy me that these financial statements were fraudulent or not in accordance with GAAP. Therefore, I find that the RERs and the financial statements to which they refer are not defamatory. 4.

Were the Hays defamed as a result of Chandran and Platinum’s letter of October 24, 2005 to the ICAA? [ 48 ] The plaintiffs also claim that the letter written by Chandran on behalf of Platinum to the ICAA and dated October 25, 2005 [17] (hereinafter referred to simply as “the letter”) defamed the plaintiffs . The plaintiffs cite Botiuk v.

Toronto Free Press Publications Ltd. [18] at para. 62 which reads in part: [A publication] may be defamatory in its plain and ordinary meaning or by virtue of extrinsic facts or circumstances, known to the listener or reader, which give it defamatory meaning by way of innuendo different from that in which it would be understood .

In determining its meaning, the court may take into consideration all the circumstances of the case, including any reasonable implications the words may bear, the context in which the words are used, the audience to whom they were published and the manner in which they were presented. [ 49 ] In particular, the plaintiffs claim that the statements in the letter that “the alleged false Review Engagement Report was released from Hay’s office” and the implication that Hay had signed or allowed himself to be associated with a “letter, report, statement, representation or financial statement which [Hay] knows or should have known, is false and misleading”... are defamatory of the plaintiffs. [ 50 ] The defendants Platinum and Chandran deny that the letter was defamatory and in the alternative, if it was it is protected by the doctrines of absolute or qualified privilege.

The plaintiffs deny the application of these doctrines to this case. [ 51 ] I do not find the letter to be defamatory. One has to look to all of the circumstances surrounding its preparation and sending. At the time it was sent, the plaintiffs had already commenced this action claiming, inter alia , that Platinum had forged the RERs and defamed them. Platinum had not prepared the RERs. They had received them on the plaintiffs’ letterhead and apparent signature. They had been advised by the bank that the RERs were apparently fraudulent. This was a serious matter. It clearly called for an investigation.

Platinum had, through counsel, asked plaintiffs’ counsel if the matter had been reported to the ICAA. Plaintiffs’ counsel had not answered that inquiry. In that context, the letter was written and should be read.

As well, one must remember that the statement of claim was included with the letter and in addition, the fact is that Hay had already reported the incident to the ICAA. [ 52 ] In all of these circumstances, while it may be said that the words complained of refer to the plaintiffs and that they were published to a third person, the ICAA, they are not defamatory because, in my opinion, they do not have a tendency to lower Hay’s reputation in the estimation of reasonable persons in the community. [ 53 ] Even if I am wrong in this conclusion and the letter was defamatory, I find that the letter is protected by the doctrine of privilege. [ 54 ] The defendants Platinum and Chandran argue that absolute privilege applies.

The plaintiffs disagree and also argue that these defendants have not pled absolute privilege. In my view, the plaintiffs’ complaint as to the insufficiency of these defendants’ pleadings on the issue of absolute privilege must fail. While the Amended Statement of Defence of Platinum and Chandran does not specifically use the term “absolute privilege”, it is sufficiently broad to include it. For example, in paragraph 18.2(

a) these defendants pled:

The Defendants Platinum and Chandran exercised reasonable care and diligence in sending the ICAA Letter and, in the circumstances, were obliged to report the issues raised in the within Amended Statement of Claim to the ICAA. [ 55 ] The plaintiffs were not mislead as to these defendants relying on the defence of absolute privilege as well as qualified privilege. [ 56 ] Absolute privilege applies to the letter of complaint. It was addressed to the plaintiffs’ governing professional association, the ICAA.

The plaintiffs’ profession as a chartered accountant is subject to and governed by the Regulated Accounting Profession Act [19] (the “Act” ).

That statute provides for a complaints inquiry process including the right of any person to make a written complaint to an accounting organization about the conduct of a registrant — in this case, a chartered accountant. [20] One of the purposes of the Act as well as one of the purposes of the Complaints Inquiry Process as specified in the Act [21] is to “protect the interests of the public” and “the public interest”. [ 57 ] Absolute privilege can attached not only to statements made in the furtherance of judicial or quasi-judicial proceedings but also to complaints by which the quasi-judicial proceedings are initiated.

Thus in Dashtgard v.

Blair [22] , at paragraph 14, McDonald J. states: It is true that absolute privilege may attach to documents that are “incidental to the proper initiation of judicial or quasi-judicial proceedings, e.g. an information, complaint, writ or petition by which the judicial or quasi-judicial tribunal is set in motion... [ 58 ] The court in Dashtgard goes on in paragraph 14 to note, referring to an English case, that while the privilege in that case did not attach because the letter of complaint was addressed to the general bar council (which did not have jurisdiction to discipline a barrister), absolute privilege would have attached had the letter been written to the Inn of Court (which did have the jurisdiction to discipline the barrister). [ 59 ] In Hung v.

Gardiner [23] , the British Columbia Court of Appeal considered the defence of absolute privilege with respect to allegedly defamatory statements forwarded to the law society and accountants association both of which Hung was a member. At paragraph 1 the Court states: At issue in this appeal is whether a person who provides information to a professional disciplinary body about the conduct of one of its members is liable in an action brought by that member.

The clear answer is that the communication of the information is subject to absolute privilege, which provides a defence to all claims. [ 60 ] The Ontario Court of Appeal reached a similar conclusion in Sussman v. Eales [24] . [ 61 ] Having reviewed the Act , I am satisfied that the letter to the ICAA was a complaint to a professional disciplinary body and was an initial or incidental step in a quasi-judicial proceeding. As such, it is protected by absolute privilege. [ 62 ] Counsel for Platinum and Chandran has also raised in the further alternative the defence of qualified privilege.

Although, given my earlier findings that the letter was not defamatory and that if it was, it was protected by the doctrine of absolute privilege, I will deal briefly with the plea of qualified privilege. [ 63 ] Qualified privilege may be a defence to a defamatory communication. The communication must have been made: ...on an occasion where the person who makes the communication has an interest or duty, legal, social or moral, to make it to the person

to whom it is made, and the person to whom it is so made has a corresponding interest or duty to receive it. This reciprocity is essential [25] . [ 64 ] Qualified privilege is not absolute. It can be defeated if the dominant motive for publishing the defamatory statement is actual or express malice [26] . [ 65 ] The plaintiffs claim that the letter was sent due to malice. They argue that the purpose of the letter was to delay litigation by the plaintiffs and to obtain information for a contemplated counterclaim. I reject that argument.

Given the seriousness of the allegation of fraudulent RERs having been sent under Hay’s name I am satisfied that there was a duty, be social or moral, to bring the matter to the attention of the ICAA and ask for an investigation. There can be no doubt that the ICAA had a corresponding duty to receive such a complaint/report. Hay himself thought he should (and did) advise the ICAA of the situation. The solicitors for Platinum and Chandran wrote to the solicitors for the plaintiffs on two occasions [27] seeking confirmation that the matter had been reported to the ICAA but did not receive a response to the queries.

In the result, I find that the letter is protected by the doctrine of qualified privilege. 5. Did the preparation and submission to the bank of the forged RERs under the Hays name and signature constitute the tort of appropriation of personality? [ 66 ] The tort of appropriation of personality was recognized in Krouse v. Chrysler Canada Ltd . [28] [ 67 ] In Salé v. Barr [29] , Lee J., quoting Horton v. Tim Donuts Ltd . [30] said at para. 20: ...the gravemen of the tort is the usurpation of the plaintiff’s right to control and market his own image.

Implicit in this is the protected right of the celebrity to profit from the use of his or her personality and to decide how that profit is to be earned. [ 68 ] Hay claims that his personality was appropriated by the forging of the Platinum RERs which were then provided to the bank. These RERs used Hay’s name, professional designation and letterhead and a forged signature.

In addition, the plaintiffs claim that since the RERs refer to Hay’s professional corporation, there was an appropriation of the corporate personality of the corporate plaintiff. [ 69 ] The defendants’ position is that the plaintiffs’ personality has not been appropriated by the RERs because Hay’s ability to exploit his personality has not been interfered with and nor have the defendants received any commercial gain from Hay’s signature being applied to the RERs. [ 70 ] All the cases referred to me by counsel on the tort of appropriation of personality involved famous or well-known celebrities – a professional football player [31] , a star water-skier [32] , a world class figure skater [33] , a famous wealthy aristocrat [34] , a radio personality/commentator [35] .

This begs the question of whether this tort should be applied to a “non-celebrity”. [ 71 ] G.H.L. Friedman in his work The Law of Torts In Canada , 3 rd edition, 2010 Carswell, a division of Thomson Reuters Canada Limited has a helpful discussion of this tort and in particular the Athens case. At page 682 he says (citations omitted) in discussing Athens : ...The plaintiff was an expert water-skier with an international reputation. He had a characteristic and distinctive photograph of himself water-skiing which he used for commercial purposes.

One of the defendants, a public relations firm, copied this photograph and published it as a line drawing in a brochure prepared for the other defendant, advertising a summer camp for children. The consent of the plaintiff was never obtained, because the public relations firm told the camp that such consent was unnecessary because the line drawing was a “stylization”. Although the plaintiff’s name did not appear on the drawing, people who were knowledgeable would identify the picture as being that of the plaintiff. He sued for passing-off and appropriation of personality. Passing-off was rejected as a basis of

liability, because those likely to read the brochure would not identify the drawing as a picture of the plaintiff. There was no likelihood of confusion between the plaintiff’s business as a water-skier and the business of the defendants who ran the camps. However, the learned judge held the defendants liable on the ground of wrongful appropriation of personality. Such liability did not arise because people would associate the plaintiff with the camp in question. Nor had the plaintiff suffered any damage or injury in this respect.

The wrongful act of the defendant consisted in using the image of the plaintiff for their commercial advantage. “The commercial use of his representational image by the defendants without his consent constituted an invasion and pro tanto an impairment of his exclusive right to market his personality and this ...constitutes an aspect of the tort of appropriation of personality.” This gave rise to a tort action separate and distinct from any action based on infringement of trademark or copyright.

The damages recovered by the plaintiff were small, being based on the amount the plaintiff ought reasonably to have received in the market for permission to publish the drawing. This came to $500, which was about 10% of the gross receipts of the camp for the year in issue. [emphasis added] [ 72 ] In Rothschild , the judge was dealing with an interlocutory motion for an injunction. At paragraph 5 he says simply: Further there has been appropriation of personality. One cannot commercially exploit another’s name or likeness without his permission .

In my view the tort of appropriation of personality has been committed and must be enjoined. [emphasis added] [ 73 ] Applying these principles to the case at hand, I find that despite the lack of “celebrity” of the plaintiffs, the tort of appropriation of personality has been made out. A professional’s name and reputation is entitled to be protected from unauthorized commercial exploitation every bit as much as a celebrity’s name and likeness. Here, Hay, through his professional corporation, practiced as and enjoyed the reputation and cachet of a chartered accountant.

He charged fees for providing RERs and his professional reputation (and liability) was at stake when he signed RERs. Platinum used the forged RERs in the plaintiffs name, for its own commercial advantage in that it knew it required RERs prepared by a charter accountant to submit to the bank in support of its loan application for the real estate venture it wished to pursue. 6. What, if any, damages are the Hays entitled to? [ 74 ] I have already found that there was no defamation in this case. However, in the event I am found to have erred in that finding, I propose to assess damages.

In addition, I must assess damages for the appropriation of personality tort which I have found to have been proved. [ 75 ] Where defamation is proved, damages are presumed [36] . [ 76 ] The assessment of damages for defamation turns on the facts of each particular case. However, some of the factors to be considered in setting general damages for defamation are set out in by Kenny J. in Chapman v. Anderson [37] where, at paragraph 66, quoting from Hill which in turn is quoting from Gatley on Libel and Slander , she says: ...In an action of libel “the assessment of damages does not depend on any legal rule”.

The amount of damages is “peculiarly the province of the jury”, who in assessing them will naturally be governed by all the circumstances of the particular case. They are entitled to take into their consideration the conduct of the plaintiff, his position and standing, the nature of the libel, the mode and extent of the publication, the absence or refusal of any retraction or apology, and “the whole conduct of the defendant from the time the libel was published down to the very moment of their verdict.

They may take into consideration the conduct of the defendant before the action, after action, and in court at the trial of the action”, and also, it is submitted, the conduct of his counsel, who cannot shelter his client by taking responsibility for the conduct of the case.

They should allow “for the sad truth that no apology, retraction or withdrawal can ever be guaranteed completely to undo the harm it has done or the hurt it has caused.” They should also take into account the evidence led in aggravation or mitigation of the damages. [ 77 ] There is ample authority noting the importance of reputation to professional and to people who are self employed [38] . [ 78 ] Here, Mr. Hay did absolutely nothing to bring about or precipitate the transmission of the forged RERs to the bank. He is a completely innocent victim.

I also find that he is a man of fine reputation, both personally and professionally and thus being associated

with the forged RERs is a source of hurt to him personally. On the other hand, Platinum did not know when it received these RERs and submitted them to the bank, that they were forged. And, on all of the evidence, it is clear that there was very limited publication of these RERs. Platinum and its personnel did not send them to anyone else other than their lawyer and the ICAA. It appears that the bank, through Mr. Murphy immediately realized once he spoke to Hay, that the RERs were not legitimate and did not proceed or publish them further. It does not appear that Mr.

Hay published them to anyone other than his lawyer and the ICAA. So, the mode and extent of the publication was very limited. [ 79 ] I do note that there was no apology offered to Hay by Platinum or any other defendant, as to what had transpired in connection with the submission of the false RERs under the plaintiffs name. [ 80 ] The evidence of Mr. Hay that he lost business as a result of his long time client, John Edwards, deciding that there was “no longer a good fit between them”, falls far short of satisfying me that that was as a result of the alleged defamation.

Rather, on Hay’s own evidence, it appears that Edward’s decision was made because of Hay’s being involved in “lawsuits”. On the evidence before me, the only lawsuit involving Hay was the subject one — which Hay himself filed just 34 days after the alleged defamation and despite Platinum’s counsel’s suggestion that litigation was premature [39] . Similarly, Hay’s evidence that he lost business in doing accounting work for related companies of John Edwards such as COM Resources Ltd.

Resource Asset Management Ltd. and Jered Developments Ltd. falls far short of satisfying me that that was due to the alleged defamation. Further, while John Edwards was no longer living at the time of trial, there is no good explanation why, if Hay alleges he lost business from the other entities noted above, none of those corporate officers were called to testify in support of that position.

In such circumstances I am entitled to, and do, draw the inference that those persons would not have testified in support of Hay’s position on damages. [ 81 ] In short, the evidence of Hay concerning loss of business — whether through directorships or providing accounting services for other companies does not satisfy me that there were such losses or if there were, that they were caused by the forged RERs. [ 82 ] There was no specific evidence placed before me that the plaintiffs’ reputation had in fact been damaged by the alleged defamation. [ 83 ] There was no evidence or even suggestion that the alleged defamation by the RERs was motivated by malice.

In so far as the plaintiffs suggest that the letter to the ICAA was motivated by malice or ulterior motives, I reject that suggestion. [ 84 ] Counsel have referred me to a number of cases in support of their respective positions on the appropriate quantum of damages for defamation. However, these cases are of limited assistance since, as noted previously each case turns on its own particular facts. [ 85 ] Having considered the various factors set out above, had I found Hay and his company had been defamed, I would have awarded general damages of $20,000. I would not award separate damages for Mr.

Hay’s professional corporation. It was simple the corporate vehicle which he used for his practice. He and the company were and are so closely identified that, for the purposes of assessing damages, I would treat them as one and the same. Certainly there was no suggestion in argument that their damages were different. [ 86 ] With respect to damages for appropriation of personality.

Counsel for the plaintiffs candidly point out in their argument that, as far as they are aware “...there is no precedent for an appropriation of personality, similar to the facts of this case” but that this case is egregious and warrants a substantial award. [ 87 ] The defendants Platinum and Chandran argue that no damages should be awarded for this tort as Platinum “did not enjoy any improvement in its business” as a result of the RERs issued under Hay’s name.

Alternatively, they argue that damages should be limited to what the plaintiffs would have received if he had been properly retained to prepare authentic RERs and since the evidence of Hay was evasive on that point, no damages should be awarded. [ 88 ] It is true that Hay had to be directed by the court to answer the question as to what his hourly rate was in 2005 and when he did so he gave a range of $100 to $300 per hour depending on the circumstances [40] . In examination in chief he testified that for a new client he would take from 60 to 80 to 120 hours to do a RER. This is the only evidence on the issue.

The defendants did not offer any

evidence as to what they paid for RERs or that these rates and time estimates were unreasonable. I have no reason to doubt Hay’s evidence on this point and I accept it. [ 89 ] Platinum thought it had obtained a legitimate RER and intended to use it and did use it, albeit unsuccessfully, by submitting it to the bank in support of its application for financing.

I conclude that the fairest way to assess damages for this appropriation of the plaintiffs’ personality is to take the midpoint in the range for both the time it would have taken as well as the rate Hay would have charged had he in fact prepared the RERs used by Platinum. That equals 90 hours at a rate of $200 per hour for a total of $18,000. I therefore award the plaintiffs jointly the sum of $18,000 for the wrongful appropriation of personality. [ 90 ] The plaintiffs also seek an award of aggravated damages as well as punitive damages. [ 91 ] In Universal Weld Overlays Inc. v.

Shaben [41] , cited by the plaintiffs, Romaine J. awarded $30,000 aggravated damages in a defamation action in addition to general damages of $100,000.

There, she awarded the aggravated damages because she had found that the defamation (of which there were multiple instances over an extended period of time) was motivated by malice and with the intent of causing the plaintiff economic harm – to destroy or damage a competitor. [ 92 ] There is nothing in the case before me to support any suggestion that the defendants were motivated by malice against the plaintiffs or that they intended by their actions, to cause them economic harm.

There is no justification for an award of aggravated damages. [ 93 ] Punitive damages, as discussed in Hill , are not meant to be compensatory. Rather, they are awarded where a defendant’s conduct is “so malicious, oppressive and high-handed that offends the court’s sense of decency” and thus must be punished. Thus, their purpose is to punish and deter. [ 94 ] I do not find the circumstances in this case to be malicious, oppressive or high-handed such as to warrant an award of punitive damages. 7. Is Platinum vicariously liable? [ 95 ] The forging of the RERs was not the act of Platinum or Chandra.

As I have found, Humeniuk either forged the RERs himself or was a party to someone else doing it with his knowledge and assistance. Thus, the only basis upon which Platinum can be held liable for these acts of Humeniuk must be based on the principle of vicarious liability. [ 96 ] The plaintiffs argue that based upon the facts in this case and the principles set forth in Bazley v. Curry [42] and applied in Cheap Tickets & Travel Inc. v.

Carrier Talent Management Inc . [43] , Platinum should be held vicariously liable for Humeniuk’s actions. [ 97 ] Platinum, on the other hand, argues that Humeniuk’s wrongful acts were not sufficiently connected to the conduct authorized by Platinum to hold Platinum vicariously liable and, further, Platinum did not do anything to create or materially enhance the risk of Platinum’s wrongful act. Platinum relies on Fukkowka v. Pinkerton’s of Canada Ltd . [44] and S.G.H. v.

Gorsline [45] as well as Bazley . [ 98 ] In Bazley , McLachlin J (as she then was) speaking on behalf of the Court, analyses the policy considerations and principles which should surround an analysis of whether or not an employer should be held vicariously liable for the wrongful and unauthorized acts of its employee. Her discussion on the policy concerns are succinctly summarized in the head note of the case at page 3: Two fundamental policy concerns underlying the imposition of vicarious liability are the provision of a just and practical remedy for harm and deterrence from future harm.

Vicarious liability should be animated by these twin policy goals. The question in each case is

whether there is a nexus between the employment and the wrongful act. The emphasis must be on the strength of the causal link. The employment must not only provide bare opportunity, but must materially enhance the risk of a wrongful act. [ 99 ] At paragraph 41 she states (citations omitted): Reviewing the jurisprudence, and considering the policy issues involved, I conclude that in determining whether an employer is vicariously liable for an employee’s unauthorized, intentional wrong in cases where precedent is inconclusive, courts should be guided by the following principles:

(1) They should openly confront the question of whether liability should lie against the employer, rather than obscuring the decision beneath semantic discussions of “scope of employment” and “mode of conduct”.

(2) The fundamental question is whether the wrongful act is sufficiently related to conduct authorized by the employer to justify the imposition of vicarious liability. Vicarious liability is generally appropriate where there is a significant connection between the creation or enhancement of a risk and the wrong that accrues therefrom, even if unrelated to the employer’s desires. Where this is so, vicarious liability will serve the policy considerations of provision of an adequate and just remedy and deterrence.

Incidental connections to the employment enterprise, like time and place (without more), will not suffice. Once engaged in a particular business, it is fair that an employer be made to pay the generally foreseeable costs of that business. In contrast, to impose liability for costs unrelated to the risk would effectively make the employer an involuntary insurer.

(3) In determining the sufficiency of the connection between the employer’s creation or enhancement of the risk and the wrong complained of, subsidiary factors may be considered. These may vary with the nature of the case. When related to intentional torts, the relevant factors may include, but are not limited to, the following: (

a) the opportunity that the enterprise afforded the employee to abuse his or her power; (

b) the extent to which the wrongful act may have furthered the employer’s aims (and hence be more likely to have been committed by the employee); (

c) the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise; (

d) the extent of power conferred on the employee in relation to the victim; (

e) the vulnerability of potential victims to wrongful exercise of the employee’s power. [ 100 ] In considering whether or not to impose vicarious liability on an employer, the Court in Fukkowka indicates that a three step approach should be taken. At paragraph 142 it states (citations omitted): First, the court determines whether the issue is unambiguously determined by the precedents.

If not, a further two-part analysis is used to determine if vicarious liability should be imposed in light of its broader policy rationales ...The plaintiff must show that the relationship between the tortfeasor and the person against whom liability is sought is sufficiently close and the wrongful act sufficiently connected to the conduct authorized by the party against whom liability is sought ....The object of the analysis is to determine whether imposition of vicarious liability in a particular case will serve the goals of doing so: imposing liability for risks which the enterprise creates or to which it contributes, encouraging reduction of risk and providing fair and effective compensation: .... [ 101 ] Despite Platinum’s strong argument to the contrary, I have concluded that, applying the foregoing principles to the facts of this case, this is an appropriate case to impose vicarious liability on Platinum for the wrongful acts of its employee Humeniuk.

I reach this conclusion using the above analytical template, for the following reasons.

[ 102 ] In considering the first step of the analysis, it is clear that this matter has not been unambiguously determined by precedent. The Cheap Tickets case cited by the plaintiffs is not sufficiently close to the case at bar for me to conclude that this matter has been “unambiguously determined by precedent”. Therefore I turn to the second and third steps of the analysis. [ 103 ] Humeniuk was an officer and employee of Platinum. He had banking experience. I do not recall there being any evidence placed before me that he had actually been tasked on previous occasions by Platinum to obtain RERs.

Nevertheless one can reasonably assume, given his previous banking experience, that he was familiar with banking requirements for financings and RERs. I think the same assumption can be made with respect to Chandra, given his education, position and experience I am satisfied on the evidence that Chandran directed Humeniuk to obtain the RERs in the short time frame. Given the short time frame in which the RERs had to be obtained, I am satisfied that the obtaining of forged RERs was sufficiently related to the conduct authorized by Platinum ie. to obtain RERs urgently.

I do not accept Chandran suggestion in evidence that there was really not all that much rush and that he knew that a small firm could do an RER in two days. Given the evidence before me as to what was required in order for a chartered accountant to do an RER, as well as the evidence as to how long it would take Hudson to do it and how many hours it would take Hay to do it, I think it is stretching credibility to believe that someone with Chandra’s education and experience could believe it could be done properly in two days.

Consequently, I find that there is the necessary significant creation or enhancement of the risk and the wrong that ultimately accrued.

In addition, there can be no doubt that the obtaining of RERs furthered the employer’s aim of obtaining financing — it need RERs to submit to the bank as part of its application for the financing. [ 104 ] In short, I agree with the plaintiffs’ submission that “Platinum created the risk of improper conduct by Humeniuk in instructing Humeniuk to obtain RERs on an urgent basis with no questions asked ...”. [ 105 ] I also find that imposing vicarious liability on Platinum in these circumstances satisfies the two policy considerations mentioned earlier: a just and practical remedy as well as deterrence.

Without vicarious liability there is unlikely an chance that the plaintiffs will recover the damages awarded in this matter since Humeniuk testified he is bankrupt. Holding Platinum vicariously liable for Humeniuk’s unlawful act will provide a “just and practical remedy”. It will also provide a deterrence in that employers in a similar situation will be less likely to turn a “blind eye” to similar situations. [ 106 ] In conclusion, I find that the wrongful act is sufficiently related to the conduct which Platinum authorized.

For the reasons expressed above, I find that there is a significant connection between the creation and enhancement of the risk of obtaining a false or improper RER and the actual obtaining of the forged RERs in issue. And, I am satisfied that imposing vicarious liability in this case provides both a just and practical remedy as well as a form of deterrence. 8. Is the counterclaim made out? [ 107 ] Platinum has filed a counterclaim against Humeniuk.

In its written argument, Platinum states at paragraph 308: “Platinum has suffered damages as a result of Humeniuk providing the false RERs in that Platinum has been prevented from obtaining financing from RBC”. Yet in the Relief Requested portion of its written argument the only relief it claims against Humeniuk is for a judgment against him in an amount equal to any judgment awarded against Platinum and costs. [ 108 ] There was no evidence as to any damages suffered by Platinum as a result of it not being able to get financing from RBC.

Therefore this aspect of the counterclaim is dismissed. [ 109 ] I do allow Platinum’s claim for a judgment against Humeniuk to indemnify it against the judgment awarded against Platinum in favour of the plaintiffs, including costs. To the extent that the pleadings are deficient in claiming such indemnification, I would amend them to grant such relief. 9. Costs [ 110 ] The plaintiffs seek solicitor-client costs in this matter. They rely on Norman v. Westcomm International Sharing Corp . [46]

[ 110 ] The plaintiffs seek solicitor-client costs in this matter. They rely on Norman v. Westcomm International Sharing Corp . [46] There the court says at paragraph 170: The defendants pursued the defence of justification alleging the truth of the fraud as the whole defence until the opening of trial. The defence was not withdrawn until the conclusion of the plaintiff’s case. To this day there has been no apology from the defendants. Fraud is a most serious allegation. If it is alleged and not proved at trial, serious cost consequences flow.

I have found that the allegations of fraud are unfounded and a product of preconceptions and an active imagination on the part of the defendants. In these circumstances the plaintiff is entitled to solicitor and client costs until the second day of trial. [ 111 ] Counsel for the plaintiffs point to the statement of defence of Platinum and Chandran as amended at various times which allege, inter alia , that the plaintiffs had in fact contracted with Platinum to review Platinum’s financials and that the plaintiffs had prepared and signed the RERs.

In that regard, I note that paragraphs 11 and 12 of the Amended Amended Statement of Defence of Platinum and Chandra, filed December 5, 2006 state, in part: 11. Upon being advised by Royal Bank that the Review Engagement Reports had been alleged to be forged, Platinum Equities ... conducted an investigation (the “Investigation”) into the circumstances surrounding the allegations the review Engagement Reports was [sic] forged. 12.

As a result of the Investigation, Platinum concluded that: ... (b) ... the Review Engagement Reports had been prepared and executed by Hay and Hay Corporation; [ 112 ] The plaintiffs’ counsel points out that these allegations remained in the pleadings through to the end of the trial. They were never retracted and no apology was ever offered. [ 113 ] Counsel for the defendants Platinum and Chandran argue that there is no conduct of the part of their clients which would justify an award of solicitor client costs.

They point out that their counterclaim was dismissed by a consent order as against the plaintiffs in October 2006 after “... Platinum obtained information in the course of the litigation that Hay was not involved in preparing the RERs”. This begs the question why the allegation was continued in the Amended Amended Statement of Defence filed two months later. [ 114 ] Counsel for the defendants Platinum and Chandran at paragraph 315 of their written argument “seek leave to speak to costs after the decision of this Honourable Court is pronounced”.

Counsel for the plaintiffs do not comment on this request in their Reply written argument. I therefore interpret the request not to be one of continued argument on whether or not costs should be awarded on a solicitor -client basis, but more likely as to the issue from what point costs should be calculated. I will therefore determine the issue as to whether or not costs should be awarded on a solicitor -client basis. [ 115 ] In my view, this is one of those rare occasions when a plaintiff should be awarded his costs on a solicitor-client basis.

Hay had nothing to do with the forged RERs which were submitted to the bank. He is an innocent victim. The whole situation was precipitated by the wrongful act of Humeniuk who was an employee of Platinum and had been given the task of getting RERs on an urgent basis [47] . Platinum has associated Hay and his corporation with the forged RERs by virtue of its pleadings. Those pleadings, in part quoted above, were never retracted. Nor was an apology for what happened ever given by Platinum to the plaintiffs — particularly after Platinum had determined that Hay was not involved in preparing the RERs.

In the circumstances, Hay really did not have much choice but to seek vindication in the courts, even though the cost of pursuing the action might not be commensurate with damages awarded. [ 116 ] The allegations noted above are tantamount to allegations of fraud against the plaintiffs in that they are alleged to have prepared and signed RERs which they had not. They were never retracted. The pleadings remain a matter of public record. In my opinion, solicitor-client costs are appropriate and I award them to the plaintiffs. Conclusion

[ 117 ] The plaintiffs’ action for defamation is dismissed. [ 118 ] The plaintiffs’ action for appropriation is allowed. [ 119 ] The plaintiffs’ are entitled, jointly to the sum of $18,000 for wrongful appropriation of personality. [ 120 ] The defendant Platinum is vicariously liable for Humeniuk’s wrongful act. [ 121 ] Platinum’s counterclaim against Humeniuk for damages is allowed to the extent that it is entitled to be indemnified against the judgment against it. [ 122 ] The plaintiffs are entitled to their costs on a solicitor and client basis, to be taxed. [ 123 ] The plaintiff are entitled to pre-judgment interest.

Heard on March 14, 15, 16,17, 24 & April 7 &15, 2011. Dated at the City of Calgary, Alberta this 28 th day of March, 2012. C.S. Brooker J.C.Q.B.A. Appearances:

Patrick D. Fitzpatrick for the Plaintiffs Renee Reichelt for the Defendants Platinum Equities Inc. and Sri H.

Chandran David Humeniuk unrepresented and appearing only as a witness. [1] See Exhibit 1, Tab 8. [2] See Exhibit 1, Tabs 49 and 50. [3] See Exhibit 1, Tab 20. [4] See Exhibit 1, Tab 51 which Chok testified he instructed Higgs to send. [5] See Exhibit 1, Tabs 10 and 11. [6] See Exhibit 1, Tab 12. [7] See Exhibit 1, Tabs 13 to 20. [8] See Exhibit 1, Tab 22. [9] See Exhibit 7 as well as 8. [10] See his resume at Exhibit 4, Tab 1 F. [11] See Exhibit 1, Tab 46. [12] See Exhibit 4, Tab 1 J. [13] See Exhibit 1, Tab 50. [14] Chohan v. Cadsky, 2007 ABQB 498 at para. 240. [15] Amalgamated Transit Union v.

Independent Canadian Transit Union [1997] A.J. No.191(Q.B.) at para.23. [16] See paragraph 9 and 10 of the Amended Statement of Claim. [17] See Exhibit 1, Tab 42. [18] (SCC), [1995] 2 S.C.R. 3 [19] RSA 2000,

Chapter R-12. [20] See section 67(1) of the Act. [21] See sections 2(

a) and 65(1)(

a) of the Act. [22] 1990 CarswellAlta 589 (Q.B.).

[23] 2003 BCCA 257 , [2003] B.C.J. No.1048. [24] [1986] O.J. No.317. [25] Adam v. Ward [1917] A.C. 309 (H.L.) approved McLaughlin v. Kutasy (SCC), [1979] 2 S.C.R.311 at p.321. Seealso Botiuk v. Toronto Free Press Publications Ltd. (SCC), [1995] 3 S.C.R.3 at para. 78. [26] Hill v. Church of Scientology of Toronto (SCC), [1995] 2 S.C.R. 1130 at para.147. [27] See Exhibit 1, Tabs 17 and 19. [28] 1973 CarswellOnt 884 (CA). [29] 2003 ABQB 431. [30] [1997] O.J. No.390 (General Division). [31] Krouse. [32] Athens v.

Canadian Adventure Camps Ltd., 1977 CarswellOnt 453 (H.C.). [33] Salé. [34] Baron Philippe de Rothschild S.A. v. Casa de Habana Inc., 1987 CarwellOnt 936 (S.C.). [35] Racine v. C.J.R.B. Radio Capitale Ltee., 1977 CarswellOnt 640(County Court). [36] Defamation Act, RSA 2000, c.D-7, s.2. [37] 2006 ABQB 714. [38] See for example Botiuk, Hill and Chapman, supra. [39] See Exhibit 1, Tab 17. [40] I attribute his reluctance to answer is attributable to “professional reticence” to discuss fees in the abstract rather than any attempt atinsincerity in his testimony. [41] 2001 ABQB 1009. [42] (SCC), [1999] S.C.J.

No.35. [43] 2006 CarswellBC 3269. [44] 2010 SCC 5 , [2010] 1 S.C.R.132. [45] 2004 ABCA 186. [46] 1997 CarswellOnt 4701 (General Division). [47] It is interesting to note that it does not appear that Platinum fired Humeniuk for any reason relating to the obtaining of these RERs. Chandra’s letter to Humeniuk of November 2nd, 2005 (part of exhibit 6) terminating his employment for cause, although itspecifies a number of failures on the part of Humeniuk, there is no mention at all of Humeniuk’s actions in having obtained the forgedRERs.