In 2012, the B.C. Supreme Court dismissed a defamation claim over a corporate news release
that provided general information about the intended response to a
lawsuit. The case was dismissed on the grounds that news
releases issued by public companies to report on litigation brought
against them are published on occasions of either absolute or
qualified privilege. As such, the content of the news
releases, even if defamatory, is protected and cannot be the basis
of a defamation claim.
The claim arose when Redcorp Ventures Ltd., a publicly traded
company, issued a news release about a claim brought against it by
Merit Consultants International for breach of contract. Merit
had been providing consulting services to Redcorp but Redcorp
terminated the contract. Merit sued over the
termination. Redcorp issued a news release stating it had
good reason to terminate Merit's contract and would
"vigorously defend the action and counterclaim alleging
negligence and breach of contract on the part of Merit that has
caused damage . . . , and for costs". Because Redcorp
subsequently went into bankruptcy, Merit then sued Redcorp's
directors personally alleging that the news release was
The B.C. Court of Appeal recently dismissed an appeal of this case. In doing so, they
touched on the vexing issue of the potential personal liability of
directors and officers for conduct they cause their company to
undertake. This issue is presently an unsettled one in
Canadian law. On the one hand, a company can only act through
its agents and employees. As such, provided directors and
officers are acting within the scope of their authority, their
conduct is that of the company, not theirs personally. After
all, businesses will not function efficiently if their officers and
directors are inhibited from carrying out a corporate purpose for
fear of being personally sued.
On the other hand, individuals are responsible for their own
conduct. If they undertake tortious behaviour, they ought to
be responsible for it, even where it is done jointly with others
(i.e., the company). In Ontario, several cases have allowed
claims against both the company and the directors carrying out the
Resolving these competing interests is not an easy task.
In B.C., the dividing line appears to be that claims against
directors and officers will only be viable if a plaintiff has an
independent cause of action against him/her in addition to whatever
the claim asserted against the company may be. As is often
the case, much depends on the facts of each claim.
However, in the Merit case, while the Court did not reconcile
these competing views, it did reach a conclusion that is
encouraging for directors and officers. They reasoned:
Without attempting to reconcile all the case law, it seems . . .
that the case at bar lies at the far 'no liability' end of
the spectrum of directors' personal liability. No
"independent" or "personal" tort was pleaded
and no allegation was made that the Directors had acted other than
bona fide in the best interests of Redfern and Redcorp. More
importantly, it cannot be said on the evidence before the Court
that the conduct of the Directors exhibited a "separate
identity or interest" from that of the companies; that there
was some activity that took the Directors "out of the role of
directing minds of the corporation", . . . ; nor that the
conduct complained of consisted of physical injury, property damage
or nuisance . . ., or fraud or dishonesty.
On this basis, the Court found no principled basis on which,
even if the news release was defamatory, to visit liability upon
the individual directors. This decision is good news for
officers and directors as it creates as bright a line as is
currently possible in Canadian law to illustrate the type of
conduct that will and will not attract personal liability. As
long as you are acting within the scope of your duties, and not for
an ulterior or oblique purpose, then you will likely be protected
from claims against you personally for the actions of the
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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