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Case Analysis: D’Mello v. The Law Society of Upper Canada

Posted - April 7, 2015

The case of D’Mello v. The Law Society of Upper Canada was released by the Ontario Court of Appeal on December 22, 2014 and deals with the thorny issue of privilege as it applies to regulatory investigations, where a lawyer who was the subject of such an investigation commenced a defamation action against his regulatory body. The respondents successfully brought a summary judgment motion in the Superior Court of Justice to dismiss the appellant’s defamation action, relying on the defence of absolute privilege. The appellant appealed the dismissal of his action on the basis that absolute privilege did not apply in these circumstances.  

This case is important as it deals with the complex issue of absolute privilege as it extends to investigators performing their regulatory duties.  Specifically, the case reaffirms that:

1. Investigators acting within the scope of their authority are protected from defamation actions

2. The common law principle of absolute privilege as it extends to regulatory investigations will not be superseded by statutory requirements where the statute does not “clearly and unambiguously” require this.   

The facts of the case can be briefly summarized as follows: complaints were filed with the Law Society of Upper Canada (“LSUC”) by two financial institutions in connection with mortgage frauds.  As a result of its investigation, LSUC commenced disciplinary proceedings against the appellant on June 17, 2010.  On June 28, 2010 an investigator for LSUC sent emails to the two complainants at the request of discipline counsel for LSUC.  The appellant sued LSUC for defamation, alleging malice, as a result of the content of these emails.  

The appellant argued that section 9 of the Law Society Act (“Act”) restricted LSUC’s ability to defend itself in a defamation action by imposing a requirement that LSUC act in good faith.  LSUC countered that s. 9 of the Act didn’t supersede the defence of absolute privilege.   The Court of Appeal agreed, in short, with LSUC, and pointed to the fact that s. 9 of the Act was a “rights-granting” measure as opposed to “rights-limiting” measure.  Furthermore, with respect to the appellant’s argument that it was  “… in the public interest to protect persons whom officials of the Law Society have defamed with malice…” the Court stated as follows:

[18] The appellant’s submission overlooks the broader context of the legislation: the protection of members of the public in their dealings with lawyers. An official of the Law Society who is investigating a complaint about a lawyer is engaged in furthering the public interest in ensuring that lawyers maintain high standards of conduct and do not abuse their position. If such persons were not granted absolute privilege in defamation actions, their mere allegation of malice on the part of the lawyer being investigated could subject them and the Law Society to costly and lengthy litigation requiring them to justify why an investigation into a complaint was warranted. Such an approach would be inconsistent with the overarching goal of protecting the public through the responsive and timely investigation of complaints.

The appellant also argued that a distinction should be drawn between instances where the investigator gives information to complainants as opposed to receiving information from complainants.  The Court of Appeal disagreed, and went on to affirm that absolute privilege protected the investigator’s communications in this particular case. In arriving at this conclusion, the Court determined that “… the purpose of the communication as a whole must be considered as opposed to each phrase without context and in isolation”.   

The Court of Appeal went on to highlight that the investigator had been “acting in his capacity as an investigator” for LSUC, and that he was not acting outside of the “scope of his duties” when he sent emails to the two complainants providing the complainants an update on the appellant’s case.   Therefore, the important message for regulators is that they can take comfort that where their investigators are acting in their capacity as investigators and within the scope of their duties, they will not be vulnerable to civil claims for defamation.  

To read the full text of this decision, see: https://www.canlii.org/en/on/onca/doc/2014/2014onca912/2014onca912.html?searchUrlHash=AAAAAQAMZCdtZWxsbyBsc3VjAAAAAAE&resultIndex=3