In this decision, the British Columbia Supreme Court determined
that it is not defamatory for a company to tell its shareholders
how it intends to respond to a lawsuit, even if it does not end up
responding that way.
In April 2007, Merit Consultants International Ltd. (Merit), an
engineering firm, entered into a contract with Redfern Resources
Inc. (Redfern), a mining company, under which Merit would become
the construction manager at Redfern's site in northwestern B.C.
Redfern terminated the contract in March 2008 and Merit sued,
seeking damages for breach of contract. Redcorp Ventures Ltd.
(Redcorp), Redfern's parent company, issued a news release
stating that Redfern would "vigorously defend"
Merit's lawsuit and would counterclaim to allege, among other
things, negligence by Merit. Redfern eventually did file a
counterclaim, but it did not allege negligence.
Both Redfern and Redcorp went bankrupt before the breach of
contract claim could be decided. Merit then sued former directors
of Redcorp alleging, among other things, that the news release was
defamatory. Merit argued that an allegation of negligence against
professional engineers was a serious attack on their
The directors applied for summary dismissal of the defamation
claim, arguing that the news release was protected by qualified
privilege, which protects communications made by a person who has
an interest or duty to make it to a person who has a corresponding
interest or duty to receive it and by absolute privilege, which
protects communications that take place during, incidental to, and
in the processing and furtherance of court proceedings.
The Court found that the communication was protected, whether
the occasion was one of qualified privilege or absolute immunity,
and dismissed the claim. In so doing, the Court noted that it would
be untenable if Redfern was only entitled, at law, to report the
fact that the claim had been commenced without also advising its
shareholders that the action would be defended and on what
In a related decision, the Court found that the defendants were
entitled to special costs because, among other things, Merit had
pursued a defamation claim that was not viable. See 2013 BCSC
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
In Bank of Montreal v Bumper Development Corporation Ltd, 2016 ABQB 363, the Alberta Court of Queen's Bench enforced the "immediate replacement" provision in the Canadian Association of Petroleum Landmen 2007 Operating Procedure...
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