COURT OF QUEEN'S BENCH OF MANITOBA

Date: 20211215 Docket: CI 12-01-79322

(Winnipeg Centre) Indexed as: Muzik v. Worthington et al.

Cited as: 2021 MBQB 263

COURT OF QUEEN'S BENCH OF MANITOBA B E T W E E N: ) Appearances: KENNETH WAYNE MUZIK, ) )

plaintiff, ) ) William S. Gange,

) Thomas K. Reimer and

-and- ) Tamara D. Reimer ) for the plaintiff WILLIAM WORTHINGTON, ) CANADIAN BROADCASTING ) Andrea Gonsalves and CORPORATION, GOSIA SAWICKA, ) Justin A. Safayeni CECIL ROSNER and JOHN BERTRAND, ) for the defendants

) defendants. )

) ) JUDGMENT DELIVERED: ) December 15, 2021

REMPEL, J.

Index

Introduction......................................................................................................... - 1 -

The Main Narrative............................................................................................... - 1 -

Damages Sought ................................................................................................. - 3 -

Decision .............................................................................................................. - 3 -

Summary of Facts ................................................................................................ - 3 -

The Events Leading to the Investment of the Pension Proceeds ........................... - 3 -

The Professional Relationship .......................................................................... - 11 -

The News Stories ............................................................................................... - 16 -

History of the Litigation ...................................................................................... - 22 -

The Evidence of Mr. Muzik adopted by the CBC ................................................... - 26 -

The Law and Anaylsis as to Liability .................................................................... - 31 -

Defence of Truth or Justification ...................................................................... - 33 -

Defence of Fair Comment ................................................................................ - 33 -

Qualified Privilege ........................................................................................... - 34 -

Defence of Public Interest Responsible Communication ..................................... - 34 -

Are the News Stories Defamatory? ................................................................... - 34 -

The Legal Test ................................................................................................... - 37 -

The Defamatory Meanings in this Case............................................................. - 41 -

Available Defences ............................................................................................. - 46 -

The Defamatory Words are Statements of Fact – Not Opinion ........................... - 46 -

Defence of Substantial Truth/Justification ............................................................ - 48 -

The Opinion of Mr. Boyce ................................................................................ - 48 -

Omitting Material Facts....................................................................................... - 51 -

Key Factual Statements in the News Stories are not True .................................. - 54 -

“Last year Bill noticed his $600,000 pension was more than half gone” and “his investments dropped by more than $300,000, forcing him to sell his house and look for work again.” ................................................................................................... - 54 -

“As for Worthington, he said he hopes to retire again someday.” ....................... - 56 -

“In December, Muzik was ordered to pay a $15,000 fine after the commission reprimanded him for unsuitable investing” ....................................................... - 57 -

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“Everybody’s happy with it, they’re all making money and it’s a good investment thing, and at the time, he never used the word ‘leverage’.” ........................................ - 57 -

The Defence of Public Interest Responsible Communication in the Public Interest .. - 57 -

The CBC acted with Malice .............................................................................. - 58 -

The Legal Test for the Public Interest in Responsible Communication Defence ... - 62 -

Public Interest ............................................................................................. - 62 -

Due Diligence .............................................................................................. - 63 -

Seriousness of the Allegation ....................................................................... - 63 -

Status and Reliability of the Source .............................................................. - 64 -

Damages ........................................................................................................... - 66 -

1. First Principles ....................................................................................... - 66 -

a) General Damages ............................................................................... - 66 -

b) Aggravated Damages .......................................................................... - 68 -

c) Punitive Damages ............................................................................... - 70 -

2. Application of the Principles to the Facts of the Case ................................ - 71 -

3. General Damages .................................................................................. - 71 -

4. Aggravated Damages ............................................................................. - 76 -

5. Punitive Damages .................................................................................. - 77 -

6. Special Damages ................................................................................... - 78 -

a) First Principles .................................................................................... - 78 -

7. Application of the Principles to the Facts ................................................. - 78 -

Summary and Conclusion ................................................................................... - 87 -

Introduction

[1] The plaintiff, Kenneth Wayne Muzik (“Mr. Muzik”) is an investment advisor who

is seeking damages for defamation. In a nutshell, Mr. Muzik claims that he was defamed

beginning in June of 2012 during two different new stories broadcast on television by the

Canadian Broadcasting Corporation (the “CBC”) in Winnipeg and thereafter when further

articles were published about Mr. Muzik on the CBC news website. In these reasons I

will from time-to-time refer to the television broadcasts or website articles by their

particular dates or some other descriptive term. At other times, I will also refer to these

broadcasts and print stories cumulatively as the “News Stories”.

[2] The main protagonist featured in the News Stories was the defendant William

Worthington (“Mr. Worthington”), a former client of Mr. Muzik, who expressed profound

regret about relying on Mr. Muzik’s advice to cash out his pension of approximately

$675,000 earned through his employment at Canadian Pacific Railway and to then invest

the proceeds in an investment portfolio created by Mr. Muzik for his retired “railroader”

clients.

The Main Narrative

[3] The main narrative at the heart of the News Stories was Mr. Worthington’s

allegation that he commuted his pension on Mr. Muzik’s advice and agreed to an

investment plan devised by Mr. Muzik that tore his retirement dreams to shreds. The

first television broadcast on June 19, 2012, (the “First Broadcast”) included

Mr. Worthington’s observations that, the value of his $600,000 pension was “more than

half gone” since his retirement some years earlier and implied he and his wife would be

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forced to sell their house and return to work to make ends meet, rather than enjoying a

life of leisure in retirement.

[4] The First Broadcast included reporting that Mr. Muzik recorded false information

in Mr. Worthington’s file, including inflated income levels, intended to justify higher-risk

investments than would otherwise have been permitted by Mr. Muzik’s regulatory body.

It was also reported that Mr. Muzik was under strict supervision by the Manitoba

Securities Commission (the “MSC”) and had been ordered to pay a fine of $15,000 for

actions contrary to the public interest.

[5] The concluding comment made by Gosia Sawicka (“Ms. Sawicka”), the CBC

reporter in the First Broadcast, was the Worthingtons were “… hoping they can retire

again one day.”

[6] Apart from the CBC, Mr. Muzik also named two other CBC employees (Cecil Rosner

and John Bertrand) who were involved in the decision to broadcast and publish the News

Stories as defendants. Mr. Muzik discontinued the action against Mr. Worthington and

the defendants Rosner and Bertrand prior to trial. At trial, the CBC and Ms. Sawicka were

the only remaining defendants to this action.

[7] The News Stories or links to the News Stories remained active on the CBC news

website after the CBC was served with a notice indicating that a defamation action

was pending and that remained the case throughout the trial, which concluded in

May of 2021.

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Damages Sought

[8] Mr. Muzik testified that the News Stories had a devastating impact on his personal

life and his ability to earn income as an investment advisor for many years. According to

Mr. Muzik, the value of the assets he had under management from his client accounts

dropped significantly. Further, Mr. Muzik argued he also lost income due to the loss of

prospective clients he had in the “pipeline”. These clients were railway employees who

were contemplating retirement and had attended his seminars where he outlined the

possibility of commuting railway pensions and investing the proceeds.

[9] Apart from special damages arising from loss of income, Mr. Muzik is seeking

general damages and aggravated damages. Mr. Muzik also argues that punitive damages

are also appropriate in this case.

Decision

[10] I am satisfied that the News Stories are defamatory and the CBC has failed to

establish it can escape liability through any possible defence available to it. As a result

of my findings as to liability Mr. Muzik is entitled to damages. My reasons as to liability

and damages follow.

Summary of Facts

The Events Leading to the Investment of the Pension Proceeds

[11] Mr. Muzik obtained his licence to sell mutual funds in 1982 and carried on practice

in a small firm that was acquired by Assante Financial Management Ltd. (“Assante”).

After resigning from Assante in 2004, Mr. Muzik joined Wellington West Financial

(“Wellington West”) where he continued to work until 2012, when it was purchased by

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National Bank Financial (“NBF”). Throughout those years Mr. Muzik focused a significant

amount of his professional practice on developing a client base consisting of railway

employees, who had the option under the terms of the their defined benefit pension plans

of commuting or cashing out the accumulated value of their pensions prior to turning

55 years of age and transferring the cash value into a privately managed investment

portfolio of their choice.

[12] In 2006 Mr. Worthington was 54 years of age and employed as a conductor for

the Canadian Pacific Railway (“CP Rail”). At that time Mr. Worthington knew he had to

make a choice between continuing to work after age 55 and claiming his defined monthly

benefit under his pension plan or resigning from CP Rail before turning 55 and transferring

the commuted value of his pension plan into a privately managed investment portfolio.

The transfer of the cash value entailed a transfer to a locked-in retirement savings plan

that attracted no tax consequences and a separate taxable cash payment.

[13] The recollections of Mr. Worthington and Mr. Muzik at trial differed substantially

on what was said and agreed to at their three meetings prior to the day Mr. Worthington

submitted his resignation to CP Rail in mid-May of 2006. The resignation took effect on

May 30, 2006. To the extent the evidence of these witnesses diverged on key points I

am satisfied that the evidence of Mr. Muzik was more reliable and credible. I am satisfied

that at times Mr. Worthington’s memory was clouded by bitterness tied to his buyer’s

remorse about an investment plan that did not work out the way he had hoped. This led

Mr. Worthington to remember certain events in a way that painted Mr. Muzik in the worst

possible light.

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[14] Further, for reasons I will delve into shortly, I am also satisfied that at times

Mr. Worthington was not a truthful witness. I do not believe the evidence offered by

Mr. Worthington and echoed by his wife, Leslie Worthington, that the decision to

“go public” by contacting the CBC about their long list of complaints about Mr. Muzik was

motivated by a desire to inform the public about the risks of commuting a defined benefit

pension. I am satisfied on all of the evidence that their joint plan was to inflict as much

negative publicity as possible on Mr. Muzik, in order to achieve a favourable financial

settlement from NBF, that had terminated its contract with Mr. Muzik not long after the

First Broadcast.

[15] Although Mr. Worthington was not a sophisticated investor, I am satisfied that he

did his own research and developed a fixed intention to retire and commute the value of

his pension before turning 55. This was well before he met Mr. Muzik for the first time

in April of 2006. That meeting came about after Mr. Worthington saw a flyer with

Mr. Muzik’s name on it at his workplace and he arranged an appointment with Mr. Muzik.

By that time Mr. Worthington had already spoken to his credit union manager and an

advisor at Investors Group about retiring and commuting the value of his pension.

Neither of these individuals inspired confidence in Mr. Worthington, so he sought out

Mr. Muzik for advice on what kind of private investment plan could be designed for him.

[16] I do not believe the evidence of Mr. Worthington that he would have delayed

retirement to a date after his 55th birthday on July 18, 2006 and he would have been

content to claim his defined benefit pension from CP Rail, but for the advice of Mr. Muzik.

By the time he arranged for the first meeting with Mr. Muzik the only issue on

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Mr. Worthington’s mind was who he would invest the cash value of his pension with,

rather than whether he would retire before age 55.

[17] Mr. Worthington came to the first meeting armed with a long list of questions. I

accept the evidence of Mr. Muzik that at their first meeting Mr. Worthington was

essentially interviewing him about his qualifications and skills as a financial advisor. The

meeting was not about whether Mr. Worthington should retire before he turned 55 and

commute his pension or remain with the defined benefit pension that he could collect

from CP Rail. Someone as cautious as Mr. Worthington would not have delayed the

consideration of such a fundamental question when his 55th birthday was only a few

months away.

[18] At the first meeting Mr. Worthington asked questions about the death benefits his

wife and children would receive from his estate in case he died while he was a younger

retiree. Mr. Muzik confirmed those benefits would be higher under a private investment

plan. He also confirmed that Mr. Worthington could, at his option, draw higher monthly

benefits in the early years of his retirement and then reduce them when he qualified for

his Canada Pension Plan benefits after age 60. Due to the fact that his wife was almost

ten years younger than he was and that he had children from a previous marriage, these

were logical questions for Mr. Worthington to ask. After the first meeting Mr. Worthington

made no firm commitments and indicated to Mr. Muzik that he would get back to him.

[19] At their second meeting Mr. Muzik recalled showing Mr. Worthington the

PowerPoint slides he presented to railway employees at retirement seminars. These

slides explained the fundamental principles of investing the cash values of pension plans

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with a view to obtaining returns that could replicate the after tax monthly payments of a

defined benefit pension. Included in the slides were comments that there were risks in

investing the proceeds of the pension as there would invariably be downturns in the stock

market (“bear markets”) or other circumstances where expected returns would require

a decrease in monthly draws to allow the investment plan to recover more quickly in a

rising market.

[20] Mr. Muzik indicated that he told Mr. Worthington about the risks of economic

downturns that would lower rates of return and portfolio values. To mitigate these risks

Mr. Muzik explained that “belt tightening” and a return to part-time work during

retirement years might be required. I believe Mr. Muzik offered this advice and I do not

believe Mr. Worthington’s evidence that he did not hear one single cautionary word from

Mr. Muzik about the potential risks inherent in a private investment plan. Mr. Worthington

admitted to seeing the PowerPoint slides and although he claimed he was uncertain of

the dates, he was somehow certain it was not before he tendered his resignation to

CP Rail.

[21] Mr. Worthington also admitted remembering Mr. Muzik’s comments about the

commuted pension being paid out in two tranches and the increased flexibility he could

potentially enjoy in a private investment by taking increased payments before he turned

60. Further, Mr. Worthington remembered the comments made by Mr. Muzik about how

prevailing interest rates in effect on the day of retirement effected the commuted value

of the pension plan, yet Mr. Worthington had no recollection of Mr. Muzik communicating

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any possible downsides of commuting his pension plan. This evidence is not believable

to me.

[22] Prior to hearing this news there was a conversation between the two of them as

to the timing of a potential resignation. There is no dispute that Mr. Muzik advised

Mr. Worthington that retiring before the end of May 2006 would be a better choice

because prevailing interest rates could soon be changing in a direction unfavourable for

a retiree who wanted to exercise the option to commute the cash value of a CP Rail

pension. I accept the evidence of Mr. Muzik that he gave this advice on a hypothetical

basis, as he did not know when Mr. Worthington wanted to retire. The evidence of

Mr. Worthington that he was still unsure as to whether he would retire before 55, and

commute the CP Rail pension, and that he only made that decision based on the advice

of Mr. Muzik, is not believable.

[23] I accept Mr. Muzik’s evidence that after their third meeting Mr. Worthington still

had not communicated to him that he was going to retire before his 55th birthday and

invest the cash value of his pension. Mr. Muzik only heard of that news after

Mr. Worthington called him to say he had submitted his resignation to CP Rail and he

wanted Mr. Muzik to be his financial advisor.

[24] Mr. Worthington’s decision to retire in May locked in the commuted value of the

CP Rail pension, but the formal opting out could not happen until all the paperwork was

signed. The information package with the necessary opting out forms was mailed by

CP Rail to Mr. Worthington in July of 2006. At that time Mr. Worthington still had the

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option of staying in the defined benefit CP Rail pension or commuting the value of

the pension and investing the proceeds.

[25] The concern expressed by Mr. Worthington once the paperwork was in hand was

that the commuted value of the pension shown in the forms was approximately $675,000

rather than a value of up to $800,000 that Mr. Muzik had told him he could possibly

expect. Again, the evidence of Mr. Worthington was that he would have remained in the

CP Rail pension and declined the option to opt out of his CP Rail pension in July of 2006,

but for the assurances of Mr. Muzik that he could negotiate a settlement that would

increase the commuted value to as much as $800,000.

[26] This is not believable to me for two reasons. Firstly, Mr. Muzik was an experienced

and award-winning financial advisor who knew better than to present potential clients

with zero risk investment guarantees. Secondly Mr. Muzik also prepared and presented

a detailed financial projection for Mr. Worthington (Document #198 of the Agreed Book

of Documents) showing monthly payments of $2,650 to Mr. Worthington from the

investment plan and Mr. Muzik’s notes about Mr. Worthington wanting to increase those

payments to $3,500. The detailed financial projection also included a statement dated

September 5, 2006 generated by Mr. Muzik’s proprietary software that showed an

investment of a commuted value of $675,589. The calculations also projected identical

after-tax payments on a defined benefit pension and a private investment over a period

of 30 years on an assumed average rate of return of 6 per cent per year on

such an investment. Mr. Worthington’s name was prominently featured on the detailed

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calculations and it is not believable to me that Mr. Muzik did not disclose any of this

information to Mr. Worthington.

[27] Mr. Worthington testified he had no recollections at all of ever seeing the detailed

projections prepared by Mr. Muzik or talking about it with Mr. Muzik. He was unable to

explain in any rational way why he ultimately agreed to commute his pension without

ever seeing any documents or calculations that showed what his monthly benefits were

expected to be or the rate at which his portfolio balance would decrease over a 30-year

span. It defies logic that Mr. Muzik would go to the trouble of preparing these documents

and then fail to show them to Mr. Worthington or that Mr. Worthington would make such

a significant decision without ever demanding that the figures be reduced to writing.

[28] In summary I am satisfied on all of the evidence that Mr. Worthington did not seek

Mr. Muzik’s advice as to whether he should retire before his 55th birthday and commute

his CP Rail pension. I accept as fact that over the course of their three meetings,

Mr. Worthington sought out advice from Mr. Muzik to confirm that he understood in broad

strokes what his options with respect to commuting his pension might be if he invested

the proceeds in a private plan and how this choice would impact his wife and children at

the time of his death.

[29] Sometime after the third meeting, having satisfied himself that he understood his

choices, Mr. Worthington advised Mr. Muzik that he had terminated his employment with

CP Rail with an expectation to commute the value of his pension. At that time

Mr. Worthington also advised Mr. Muzik that he would retain him to invest the commuted

value of approximately $675,000.

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The Professional Relationship

[30] One of the first things that Mr. Muzik directed his mind to after receiving the payout

of the commuted pension funds from CP Rail was to minimize the tax consequences on

the portion of the proceeds that attracted tax liabilities. Mr. Muzik explained the concept

of an investment in flow-through shares to Mr. Worthington and that he should speak to

an advisor by the name of Earl Phillips about that since Mr. Muzik was not licensed to sell

that kind of investment. Mr. Muzik was of the view that an investment of about $30,000

in flow-through shares could neutralize Mr. Worthington’s tax liabilities.

[31] Unbeknownst to Mr. Muzik, Mr. Worthington decided to take out a line-of-credit,

using his house as collateral, in the sum of $50,000 for an investment in flow-through

shares after his meeting with Mr. Phillips. This decision by Mr. Worthington reduced the

funds available in the mutual fund portfolio that Mr. Muzik devised for Mr. Worthington.

Mr. Worthington also elected to withdraw almost $1,000 more per month from the

investment portfolio than Mr. Muzik had budgeted when he structured the investment

portfolio.

[32] As it turned out, the flow-through shares became a profitable investment for

Mr. Worthington. After his relationship with Mr. Muzik soured he insisted that the concept

of borrowing for investment purposes (“leverage”) was never explained to him by

Mr. Muzik and he had no idea of the kind of risk he was exposing himself to by purchasing

flow-through shares. I do not accept the evidence of Mr. Worthington that he had no

idea that an investment in flow-through shares carried a certain degree of risk and that

leveraging also entailed a degree of risk. I am satisfied that Mr. Muzik explained the risk

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factors to Mr. Worthington in a cursory way before making the referral to Earl Phillips and

Mr. Worthington took note exclusively of the tax benefits of such an investment while

ignoring the risks. Mr. Worthington was also unable to explain why he signed a form,

that was placed into evidence, which contains the word “Leveraging” in its title.

[33] Anyone who has followed stock markets investments and mutual fund

performances from 2006 to present will acknowledge that the investors in stocks and

mutual funds suffered through two bear markets in 2008 and 2011. In the latter bear

market, stock indices lost about 20 per cent of their value. Mr. Muzik described the

intensity of the 2011 bear market as a one-in-a-hundred year flood and as to timing, he

indicated that bear markets are usually separated by seven or eight year intervals. These

events would have caused a significant drop in the value of the investment portfolios of

any investor like Mr. Worthington.

[34] Other decisions made by Mr. Worthington, apart from larger than expected

monthly withdrawals, resulted in significant deviations from the investment plan devised

by Mr. Muzik. These decisions all involved significant lump sum withdrawals from the

investment portfolio.

[35] In 2009 Mr. Worthington made a $5,000 withdrawal from his investment portfolio

to pay for a winter vacation in Mexico. Again, I do not believe Mr. Worthington’s evidence

that Mr. Muzik encouraged him to take a large lump sum out of his investment portfolio

to take this vacation. It contradicts not only Mr. Muzik’s evidence but also portions of

Mr. Worthington’s own evidence where he stated that he did not like getting “lectures”

from Mr. Muzik about belt tightening and sticking with the investment plan.

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[36] Mr. Worthington made another decision to withdraw approximately $20,000 from

his investment portfolio for a loan to his brother-in-law. I accept Mr. Muzik’s evidence

that he expressed concern to Mr. Worthington about the risk this posed to his investment

plan. Mr. Muzik suggested instead that Mr. Worthington get a line-of-credit to finance

the loan and have his brother-in-law pay the interest on that loan so that the principal

value of his retirement portfolio would not be eroded. I am satisfied that Mr. Muzik was

truthful on this point and that Mr. Worthington’s evidence that Mr. Muzik issued no

warning about a possible risk or alternatives to a withdrawal of principal to reduce the

impact on his portfolio was not believable.

[37] In 2010 Mr. Worthington also made a decision to make a withdrawal from his

investment portfolio to finance some house repairs in order to get his house ready for

sale. This also negatively impacted his investment portfolio.

[38] By 2011 Mr. Worthington was very unhappy with the precipitous drop in the

value of his investment portfolio. In November of 2011, he called the MSC to complain

about Mr. Muzik and was asked about what information Mr. Muzik had recorded on the

Know-Your-Client forms (“KYC forms”) he was required to submit to regulators. After

requesting copies of his KYC forms, Mr. Worthington was shocked to learn that his annual

income was not as high as the KYC forms revealed and that his risk-tolerance as an

investor was over-stated.

[39] The KYC forms caused a severe erosion of the trust Mr. Worthington once had in

Mr. Muzik. Mr. Worthington and Leslie Worthington (the “Worthingtons”) believed that

they had been deceived by Mr. Muzik and they devised a cloak-and-dagger plan to have

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him admit his unethical conduct on a secret audio recording. In late November of 2011

the Worthingtons arrived at a meeting with Mr. Muzik armed with a hidden recording

device that captured their two-hour conversation with him on an audio file.

[40] The Worthingtons were completely unable to recall at trial what kind of electronic

device they used to record this conversation or describe how they were able to make

excerpts of this conversation that they eventually provided to Ms. Sawicka in an electronic

format. When asked about what kind of memory card or storage capacity the device had

for audio files, the Worthingtons were also unable to offer any answers. The only thing

the Worthingtons could recall with certainty was that the device disappeared after they

sold their house and it must have been lost during the move. No back-up copies of the

audio files were made.

[41] The evidence offered by the Worthingtons about the recording device defies belief.

I say this for several reasons. Firstly, Leslie Worthington prided herself on her work as

a patient advocate for individuals and their families who had complaints about the medical

care they received. As a result of her advocacy work, Leslie Worthington routinely

gave media interviews to various media outlets, including the CBC. This experience gave

Leslie Worthington a keen understanding of how to effectively advocate for patients

through media interviews, that would bring pressure to bear on health care administrators

and politicians to make changes to the health care system. As such, Leslie Worthington

had a keen insight into the value this recording would have in any future media or legal

battle with Mr. Muzik and I am satisfied she would not have been careless about where

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or how the recording device was stored. I am also satisfied she would have made back-up

copies of these recordings.

[42] The fact that the Worthingtons were able to make extracts of their conversation

with Mr. Muzik from the recording device contradicts their evidence that they had no

knowledge of what the device looked like or how it functioned. The high value the

Worthingtons placed on the recording is confirmed by the emails that Leslie Worthington

sent to Ms. Sawicka in which she expressed how careful Ms. Sawicka had to be in using

the extracts that were being provided to her and that Leslie Worthington was “trusting”

Ms. Sawicka in how to use the extracts. Leslie Worthington also testified that she was

expecting to use the recording in upcoming litigation.

[43] All of this strongly confirms the probability that someone as media savvy as

Leslie Worthington would not have been careless or indifferent about where the recording

device or the files containing the recording were placed. Mr. Worthington also knew of

the importance of this recording from a legal perspective. It is probable in my view that

the disclosure of the entirety of the audio recording would have been damaging to the

Worthingtons’ narrative that Mr. Muzik was dishonest and that he deceived them. Since

they wanted to achieve a financial settlement with NBF, the Worthingtons had a motive

to make sure evidence that did not fit their narrative as the victims of Mr. Muzik

disappeared.

[44] By late 2011 Mr. Worthington moved his account to a different financial advisor at

NBF and filed a complaint against Mr. Muzik with Wellington West, the Mutual Fund

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Dealers Association (“MFDA”) and the MSC. The Wellington West complaint was

ultimately forwarded to NBF.

[45] After NBF and the MSC dismissed his complaint, the Worthingtons turned to the

media to air Mr. Worthington’s grievance about Mr. Muzik. Leslie Worthington was on a

first name basis with Ms. Sawicka as a result of interviews she had given to the CBC on

patient advocacy issues, and the two clearly had developed a cozy relationship. Not long

after they first made contact Ms. Sawicka advised the Worthingtons that the CBC would

be interested in broadcasting a story featuring their complaint about Mr. Muzik. During

her investigation it became clear to Ms. Sawicka that Mr. Worthington considered Mr.

Muzik to be a “predator” and the Worthingtons were “furious” about what Mr. Muzik did

and felt “betrayed” by him. None of this was reflected in the News Stories which

Ms. Sawicka insisted were merely about informing the public about the risks of

commuting a defined benefit pension.

The News Stories

[46] Ms. Sawicka moved aggressively to get the Worthingtons’ complaint about

Mr. Muzik to air and gave short shrift to the paramountcy of objectivity, which she

described as a key part of ethical journalism. Although both Ms. Sawicka and Mr. Rosner

tried to describe the central focus of the New Stories as cautionary tales for the public

about the risks of commuting a defined benefit pension, I am satisfied that an objective

member of the public would see or understand the News Stories to be an attack on the

integrity and trustworthiness of Mr. Muzik.

- 17 -

[47] The investigation conducted by Ms. Sawicka fell below the journalistic standard

that demands an objective and thorough investigation, by relying almost entirely on

documentation provided by the Worthingtons and dismissing the conclusions of the

MSC and NBF. Both of the organizations viewed the conduct of Mr. Muzik that fell below

industry standards as relatively minor. For example, during the First Broadcast in which

Ms. Sawicka reported about the complaint the Worthingtons made about Mr. Muzik, it

was mentioned that the MSC reprimanded Mr. Muzik in December of 2011. This

reprimand was part of a settlement agreement between the MSC and Mr. Muzik that

included a voluntary payment of $15,000, which was described as a “fine” by Ms. Sawicka

in the First Broadcast, even though the word “fine” does not appear in the document.

[48] When challenged on that point in cross-examination, Ms. Sawicka said reasonable

members of the public would understand the voluntary payment to be a fine levied by

the MSC for conduct that was against the public interest. In my view, a fair reading of

the settlement agreement reveals that the payment of $15,000 and costs of $5,000 was

mutually agreed to by the parties. It further provided that given Mr. Muzik’s voluntary

agreement to the payment and acceptance of a reprimand, the MSC was “… of the opinion

that it [was] in the public interest to make this Order.” No context was offered by

Ms. Sawicka as to where the reprimand and voluntary payment fell on the scale of other

settlement agreements or findings of misconduct by other advisors. Ms. Sawicka testified

she was concerned about the lack of transparency of the MSC in making the settlement

agreement public and that there was no “real digging” by the MSC to move the

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investigation along in a timely way, which of course had nothing to do with the conduct

of Mr. Muzik.

[49] Another example of the glaring lack of objectivity in the First Broadcast was the

refusal of Ms. Sawicka to comment on the lack of transparency of the Worthingtons in

disclosing the full audio file from their secret recording of their conversation with

Mr. Muzik. Further, when she later learned that the full audio file was apparently “lost”

by the Worthingtons, neither Ms. Sawicka nor the CBC made any effort to inform the

public about this significant development in the story which by any objective measure

would throw the credibility of the Worthingtons in doubt.

[50] Ms. Sawicka could not avoid admitting in cross-examination that the decision of

the Worthingtons to withhold the full audio recording resulted in a loss of potentially

important information that could offer the public a full picture of what was discussed.

Ms. Sawicka dismissed this concern, as she was persuaded the Worthingtons must have

had valid reasons for doing so and they were otherwise credible in her view. Similarly,

Ms. Sawicka could offer no satisfactory explanation as to why Leslie Worthington was

insisting on a high degree of secrecy when she disclosed the snippets of the secretly

recorded conversation or what Leslie Worthington meant in her email of June 16, 2012

in which she commented about the excerpts by stating “Gosia: I am totally “trusting” you

with this information.”

[51] The First Broadcast also included:

a) The suggestion that the Worthingtons were being forced to sell their house

because they could no longer afford to live there due to the precipitous drop

- 19 -

in the value of their investment portfolio, when in fact they agreed to sell their

house to move into the home of Leslie Worthington’s mother who needed the

Worthingtons to be full-time caregivers due to her severe illness;

b) The absence of any comment on the Worthingtons’ failed efforts to receive

compensation from NBF;

c) A failure to mention that Mr. Worthington actually signed the KYC forms that

he complained about, which was a detail Ms. Sawicka explained fell to the

wayside due to a tight time frame and too fine a detail to work into her story;

and

d) The fact that it was reported the Worthingtons hoped to retire again, when

Mr. Worthington had not in fact returned to work and only did so for a short

amount of time after the First Broadcast. No evidence was led to indicate

Leslie Worthington was considering a return to the paid work force at the time

of the First Broadcast.

[52] Not only did Ms. Sawicka fail to report on these significant facts, she also

needlessly rushed to get the First Broadcast to air. Ms. Sawicka knew that a decision

from the MFDA was imminent. Notwithstanding that knowledge, the Article published

on the CBC website following the First Broadcast (the “First Article”) was entitled

“Reprimanded Winnipeg investment adviser faces new probe” with a link to the First

Broadcast. Unlike the First Broadcast, the First Article explicitly quoted Mr. Worthington

as saying “… his investments dropped by more than $300,000, forcing him to sell his

house and look for work again.”

- 20 -

[53] The introductory comments by the news anchor during the First Broadcast set the

tone for the upcoming segment, by stating over a chyron reading “Is your money safe?”

along with a photo of Mr. Muzik, that a financial advisor has been under investigation for

years but his clients did not know about it. Before this introductory segment finished

Mr. Worthington appeared on screen to say “trusting him” was “my biggest mistake.” In

full context this comment could only have been about Mr. Muzik. The First Broadcast

also included portions of an interview the Worthingtons gave to Ms. Sawicka in addition

to a fragment of a conversation with Mr. Muzik that the Worthingtons surreptitiously

recorded. Some comments made by the Director of MSC were also included in the First

Broadcast.

[54] At the heart of the First Broadcast and the First Article was Mr. Worthington’s

allegation that he commuted his CP Rail pension on Mr. Muzik’s advice, and that the

investment portfolio devised by Mr. Muzik exposed him to risk levels inconsistent with his

investment objectives and resulted in significant losses. Notably, the First Broadcast and

the First Article reported that:

a) Mr. Worthington’s investments had dropped by more than $300,000 forcing

him to sell his home and look for work;

b) Mr. Muzik’s files contained false information about Mr. Worthington, in that his

income had been inflated; and

c) Mr. Muzik was under strict supervision by the MSC and had been ordered to

pay a $15,000 fine.

- 21 -

[55] No reference was made in the First Broadcast or in the First Article about the

fact that the CBC knew NBF and the MSC had dismissed the complaints made by

the Worthingtons. Neither the First Broadcast nor the First Article made reference to the

fact that all trades and documents were discussed with Mr. Worthington or to the fact

that Mr. Worthington never expressed any form of dissatisfaction with Mr. Muzik prior to

the bear market of 2011. In doing this the CBC and Ms. Sawicka created a one-way

street of information against Mr. Muzik that exclusively reflected the narrative advanced

by the Worthingtons that they were victimized by Mr. Muzik.

[56] The MFDA released its decision with respect to the Worthingtons’ complaint

(the “MFDA Decision”) on July 20, 2012 confirming that Mr. Muzik failed to provide

Mr. Worthington with leverage risk disclosure forms within the six-month time frame

required for such investments. The ultimate conclusion of the MFDA was that there was

insufficient evidence to support the other complaints raised by the Worthingtons and that

the delayed production of the prescribed forms constituted only a minor violation on the

part of Mr. Muzik that would attract no sanction other than a warning.

[57] Ms. Sawicka was aware of the MFDA Decision because the Worthingtons provided

it to her. The CBC admits that it received the MFDA Decision through its former legal

counsel on May 30, 2013.

[58] The CBC chose not to report on the MFDA Decision and continued to publish further

articles about Muzik, particulars of which are as follows:

a) June 21, 2012 CBC article, “More concerns about Winnipeg investment adviser

raised”;

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b) June 3, 2013 CBC article, “Reprimanded financial adviser faces new lawsuit”;

c) June 4, 2013 CBC article, “Securities regulator fails to help troubled investors”;

d) November 14, 2013 CBC’s follow-up article, “Reprimanded financial adviser

can't sell mutual funds: commission”;

e) September 17, 2014 CBC article, “Winnipeg investment adviser faces discipline

over railway pension funds”; and

f) December 22, 2016 CBC article, “Former branch manager at Wellington West

Capital fined $30K by regulator”.

[59] The day after the First Broadcast, the CBC ran a second news story that featured

another disgruntled client of Mr. Muzik. Ms. Sawicka admitted she never called Mr. Muzik

or otherwise gave him notice that a second news story about him would be broadcast.

History of the Litigation

[60] The trial of this action began before me without a jury in April of 2019. In his

opening statement at trial, the then lawyer for the CBC conceded that the News Stories

had a defamatory sting but that the CBC had valid defences to the defamation action,

including justification, fair comment and responsible communication in the public interest.

The defamatory sting conceded by the lawyer for the CBC in its opening statement

included the main thrust of the News Stories that Mr. Worthington suffered a significant

financial loss in his retirement portfolio due to the actions or inactions of the plaintiff.

[61] The lawyer for the CBC in his opening statement at trial also made frequent

and extensive references to an expert report from Professor Sebastien Betermier, a

university professor (“Professor Betermier”), that the CBC intended to rely on at trial as

- 23 -

part of its case. The report of Professor Betermier was intended to show not

only that Mr. Muzik devised an unsuitable investment plan from a risk perspective, but

also that the plan appeared to favour the interests of Mr. Muzik over those of his client

through the payment of fees and commissions, rather than matching the retirement

objectives of his client.

[62] This comment in the opening statement was a reference to “churning,” which is a

term used in the financial planning industry to describe an excessive volume of sales or

transfers in mutual funds that maximize the fees of a financial planner to the detriment

of a client.

[63] The churning allegation caused counsel for Mr. Muzik to lead evidence during the

direct examination of Mr. Muzik as to the fees and commissions that Mr. Worthington

paid in the investment portfolio. The documents referred to in the direct examination of

Mr. Muzik had not been produced during the discovery process, so on the second day

of the trial I granted a motion by the CBC to have the trial adjourned so that the financial

documents relied on by Mr. Muzik could be disclosed and a fresh round of examinations

for discovery could follow.

[64] My hopes for a quick resumption of the trial in 2020 were dashed by the onset of

the Covid-19 pandemic and the trial could not resume until the spring of 2021. By the

fall of 2019 the CBC retained new counsel, who filed a motion to have a new expert report

as to the suitability of the investment portfolio entered into evidence at trial. I granted

the motion sought by counsel for the CBC to have a new suitability report prepared by

way of an Endorsement (Document #88 on the record).

- 24 -

[65] In early 2021, with the resumption of the trial close at hand, I granted another

motion by the CBC to amend the statement of defence which would allow the CBC to

plead failure to mitigate as part of its defence.

[66] On March 3, 2021 I issued a ruling as to two other contested motions that I heard

prior to the resumption of the trial. The first motion was with respect to the admissibility

of the report of Professor Betermier into evidence and the second motion was with

respect to settlement privilege. In my ruling I noted that the unredacted report of

Professor Betermier was entered on the record through an affidavit tendered by a CBC

witness at the motion in March of 2020. I agreed with the submissions of Mr. Muzik’s

counsel that the report of Professor Betermier was relevant in these proceedings not for

its truth but rather for the fact that it was relied on by the CBC to support its position that

Mr. Muzik engaged in churning from the date it was served with the liable notice until the

date the trial was adjourned in 2019. My ruling was based on the principle that

the assessment of damages in a defamation action makes the conduct of a defendant

prior to and at the time of publication relevant and this continues right up to the ultimate

determination of liability at trial. (See Peter A. Downard, The Law of Libel in Canada,

4th ed. (Toronto: Lexis Nexis Canada Inc., 2018) at sections 14.19-14.25.)

[67] My ruling reflected the reality that although the CBC was entitled to change its

strategy mid-trial by declining the option to rely on the report of Professor Betermier,

it could not claim that this was irrelevant to the plaintiff’s case because it forced the

plaintiff to marshal evidence to defeat the churning allegations raised by the CBC. Since

the CBC’s former counsel clearly indicated in his opening statement that the CBC intended

- 25 -

to lead evidence of churning at trial, the report of Professor Betermier was relevant

evidence in this action as to the issues of malice and damages and I permitted it to be

entered into evidence by the plaintiff.

[68] My March 3, 2021 ruling also included my reasons to the admissibility of a

settlement offer made by former counsel for the CBC (Mr. Haight) to Mr. Muzik prior to

trial. My reasons from the transcript read in part as follows:

Now to my analysis and conclusion on this point. I read Mr. Haight’s letter for the first time after hearing extensive oral arguments from counsel yesterday. The letter of Mr. Haight does not make damaging admissions about the CBC’s case, neither does it point to any apparent weaknesses in the CBC’s case. What it does do is play the churning card and the potential devastation that the report of Professor Betermier could unleash against the professional reputation of Mr. Muzik. The letter explicitly speaks to more than mismanagement of the investment portfolio of Mr. Muzik which would be fair game in a settlement offer, but it goes much farther by stating that the evidence of Professor Betermier at trial as outlined in his report would show that the drop in value of the portfolio was “likely a result of the plaintiff’s attempt to line his own pockets”.

In my opinion, any reasonable person taking an objective view of this letter would conclude that an allegation of this nature made in court on the public record against a financial advisor like Mr. Muzik would be devastating to his professional reputation. A threat of that nature is akin to alleging that Mr. Muzik was a thief and his future as a financial advisor could certainly be in jeopardy.

Mr. Haight’s willingness to play the churning card that close to trial in the knowledge that the evidence from the MSC and the MFDA pointed exactly in the opposite direction constitutes conduct of an egregious nature, in my view, that vitiates lawyer/client privilege. In that respect, the letter of Mr. Haight does not merit protection under the rule of lawyer-client privilege. It is clearly a threat to deter the plaintiff from proceeding to trial through the advancement of an argument that would be devastating professionally to a witness and for which, as best I can tell, no proof yet exists. In fact, Mr. Haight and the CBC knew of evidence entirely consistent with findings that Mr. Muzik did not engage in churning.

Threats to bring forward devastating allegations against the professional reputation of the litigant in these circumstances cannot be made in the knowledge that there was no evidence to support them.

The CBC is of course entitled to lead evidence of churning at trial if it wants to go down that road but it cannot wipe the slate clean now and pretend it was not an integral part of its trial strategy after being served with notice of libel and through the first two days of trial.

- 26 -

The portions of the letter sent by Mr. Haight that pertain to the churning allegations serve no legitimate settlement purpose. The intent of those portions of the letter were intended to put improper pressure on Mr. Muzik to settle the case on disadvantageous terms. The threat is of such character that the public interest in its disclosure outweighs the public interest in protecting settlement communications.

Settlement privilege does not extend to the portions of the April 3, 2019, letter that referred to evidence of churning and how the CBC intended to present that kind of evidence at trial.

The Evidence of Mr. Muzik adopted by the CBC

[69] The law with respect to read-ins at trial from examinations for discovery

of an opposing party under Court of Queen’s Bench Rules, Man. Reg. 553/88,

rule 31.11(1) is clear. Beard, J. (as she then was) confirms the impact and scope

of the rule in three decisions, Tangocci v. Beesley, 1999 CanLII 14106 (MB QB),

135 Man. R. (2d) 257; 4414790 Manitoba Ltd. v. Nelson, 2003 MBQB 183 (CanLII),

176 Man. R. (2d) 188; and Lebedynski v. Westfair Foods Ltd., 2000 MBQB 144

(CanLII), [2000] M.J. No. 422 (QL). In Lebedynski at para. 39, Beard, J. dispels the

notion that answers read-in from an opposing party are merely statements of opinion

that must still be proven by other means:

[39] …

. . .

2. By reading in portions of an opposing party’s discovery, the party reading in is adopting those statements as part of their case and the statements become evidence in the trial.

. . .

4. Statements from a discovery that are read in are proof of the truth of assertions contained in those statements and not merely proof that the statements were made.

5. Evidence that is read in can be used by all parties and will be evidence for or against any party depending on the case.

. . .

- 27 -

[70] Beard, J. offers a detailed summary of the law on read-ins from discovery in

Lebedynski which reads in part, at paras. 38-39:

[38] This rule sets out two separate uses at trial for the evidence given on an examination for discovery, being that an adverse party may read in from the discovery as part of his own case (rule 31.11(1)) or that any party may use the discovery in cross-examination to impeach a witness’s testimony given during the trial (rule 31.11(2)). Unfortunately, as happened in this case, counsel occasionally misunderstand the purpose of reading in and misuse the read-ins as a method of impeaching the witness. The result is that they are then stuck with having adopted damaging evidence as part of their case.

[39] The following is a summary of the law on the use of an examination for discovery at trial, some of which is codified in the Queen’s Bench Rules and some of which is from the common law (see Williston and Rolls, The Law of Civil Procedure, Vol. 2 (Toronto: Butterworths, 1970) at pp. 876-889 and Sopinka, Lederman, Bryant’s text, The Law of Evidence in Canada, 2nd ed. (Toronto: Butterworths, 1999) at §16.126-16.137):

1. One party may read in portions of an opposing party’s examination for discovery as evidence in the trial (rule 31.11(1)).

2. By reading in portions of an opposing party’s discovery, the party reading in is adopting those statements as part of their case and the statements become evidence in the trial.

3. While a prior out-of-court statement is usually inadmissible because it is hearsay, a party’s evidence given on an examination for discovery is admissible as a read-in by an opposing party as an exception to the hearsay rule.

4. Statements from a discovery that are read in are proof of the truth of assertions contained in those statements and not merely proof that the statements were made.

5. Evidence that is read in can be used by all parties and will be evidence for or against any party depending on the case.

6. While the party that did the read-in is deemed to have adopted the evidence, that party is not bound by it, in that it is still open to that party to call other evidence to contradict a part or all of the evidence that was read in (rule 31.11(4)).

. . .

[71] In Tangocci, Beard, J. underscores the risk of read-ins intended to

highlight an apparent contradiction or inconsistency in the evidence of an opponent,

which may have the effect of the party doing the read-in advancing “two diametrically

- 28 -

opposed versions” of facts before the court as part of their case that may

contradict their other evidence (at para.40). Another risk is described in

Rosenberg et al v. Securtek Monitoring Solutions Inc., 2021 MBCA 100,

at para. 61, which refers to Kensington Homes Ltd. v. Marwal Holdings Ltd.,

1985 CarswellMan 127 (QB), as “… a case about the “risk” (at para 21) to a party

undermining its case by reading in discovery evidence that may advance or corroborate

the case of the opposing party.”

[72] The “Brief of Read-Ins” submitted by the CBC lawyers from the examinations for

discovery of Mr. Muzik was entered as Exhibit 41 at trial. Counsel for Mr. Muzik made a

point of noting that by virtue of these read-ins the CBC lawyers were admitting the

truthfulness of the following statements offered by Mr. Muzik in examination for discovery

and adopting them as part of the CBC’s evidence in its case:

a) Mr. Muzik made the decision to terminate his employment with Assante;

b) NBF did not have just cause to terminate Mr. Muzik’s employment contract;

c) In taking a commuted value, Mr. Worthington would have had flexibility to

plan for things in his retirement depending on the investment returns;

d) Achieving a 6 per cent return was achievable in 2006 based upon long-term

returns from a balanced portfolio. This did not require an aggressive growth

portfolio for the entire portfolio;

e) The commission earned by Mr. Muzik with respect to the $50,000 invested by

Mr. Worthington through Earl Phillips was $700;

- 29 -

f) Investing in a leveraging strategy is not necessarily a higher risk form of

investment. It depends upon the investments that the monies are invested in;

g) Mr. Muzik explained the risks and the advantages of a leveraged investment

with Mr. Worthington. Mr. Worthington felt that it was an appropriate strategy.

It was an appropriate strategy for Mr. Worthington because the benefits of

leveraging were consistent with what Mr. Worthington told Mr. Muzik his

objectives were of paying down his mortgage;

h) The $50,000 leveraged account to purchase flow-through shares was invested

in a portfolio consisting of the larger blue-chip stocks (with medium risk) that

paid a regular quarterly dividend;

i) The missing checkmark on the “leveraged account” box in the application form

signed by the Worthingtons in April of 2007 was due to an oversight;

j) The reason that it might be inappropriate for an investor borrowing funds to

invest via a leveraged account would be that the investor was irresponsible

with debt. Mr. Worthington demonstrated that he was sincerely interested in

paying down his mortgage;

k) The nature of mutual funds is that commissions and fees are imbedded in the

mutual fund. An investor pays management fees. Those fees are split

between the portfolio management company, Mr. Muzik and Wellington West;

l) The drop in the value of the Worthington portfolio caused by a drop in the

market value of the portfolio as at February, 2012 was $60,000;

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m) With respect to KYC forms, the income of Mr. Worthington was calculated by

taking the gross income prior to withholding taxes, all withdrawals, and all tax

refunds;

n) The decision of the Director of the MSC not to license Mr. Muzik was appealed

to the Manitoba Ombudsman;

o) The MFDA closed the second Worthington complaint with a warning letter in

2015; and

p) The article published on the CBC website on November 14, 2013 was

absolutely an act of malice on the part of the CBC.

[73] Based on the law in Manitoba, as outlined above, I disagree with counsel for the

CBC that the read-ins merely reflect what Mr. Muzik’s opinions were or what he believed

to be true. I also do not agree with the CBC that there is no duty on them to rebut or

contradict what they describe as mere statements Mr. Muzik made about what he

believed. The law is clear that by virtue of the read-ins the CBC has adopted, as evidence

it its own case, the truthfulness of the statements it read-in.

[74] That means that the CBC must persuade me by way of other contradictory

evidence that I cannot rely on the truthfulness of the evidence they read-in. If the CBC

fails in this effort, I will be left with either contradictory evidence from the CBC on a key

point or an unqualified admission by the CBC that that statements made by Mr. Muzik

corroborate the case advanced by Mr. Muzik. Either one of these scenarios is harmful to

the CBC’s position.

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[75] I agree with counsel for Mr. Muzik that at face value the read-ins demonstrate that

the CBC has admitted that it absolutely acted with malice at the time it published the

website article about Mr. Muzik on November 14, 2013 and the drop in the market value

of the portfolio was limited to $60,000 and not over $300,000 as the New Stories

reported. Further, by virtue of the read-ins, the CBC is also acknowledging the truth of

the following narrative as part of its case, namely that Mr. Muzik:

a) Had a good reputation in the financial planning industry and he was not fired

for just cause from his employment at Assante or NBF;

b) Developed a suitable investment strategy for Mr. Worthington which would

allow the returns on the portfolio to mimic the equivalent of the defined benefit

pension Mr. Worthington would have received from CP Rail;

c) Offered suitable investment advice to Mr. Worthington without high risk;

d) Offered appropriate explanations to Mr. Worthington about the risks the

investment would entail;

e) Did not engage in churning to line his pockets at the expense of

Mr. Worthington; and

f) Acted without malevolent intent when he omitted checkmarks on the KYC

forms. It was merely an oversight.

The Law and Anaylsis as to Liability

[76] Although the Supreme Court of Canada expanded the available defences to the

tort of defamation in Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640, it did

confirm the existing definition of defamation under Canadian law as a strict liability tort

- 32 -

which requires a plaintiff to prove the following three essential elements on a balance of

probabilities, at para. 28:

(1) The Current Law

[28] … (1) that the impugned words were defamatory, in the sense that they would tend to lower the plaintiff’s reputation in the eyes of a reasonable person; (2) that the words in fact referred to the plaintiff; and (3) that the words were published, meaning that they were communicated to at least one person other than the plaintiff. …

[77] In Grant, at paras. 28 and 29, the Supreme Court of Canada also teaches that

the plaintiff’s burden of proof as to these three essential elements of defamation does

not include proof of an intent to harm or carelessness on the part of the defendant. Once

the standard of proof is met by the plaintiff “… on a balance of probabilities, falsity and

damage are presumed,” … and “… the onus then shifts to the defendant to advance a

defence in order to escape liability.”

[78] The defences available in a claim for defamation, include:

a) Truth or justification as to statements of fact;

b) Fair comment as to statements of “opinion” or “comment”, which may include

a deduction, inference, conclusion, criticism, judgment, remark or observation

that is generally incapable of proof;

c) Absolute privilege or qualified privilege; and

d) Public interest responsible communication as defined in the Grant decision.

Whether the impugned statement is an opinion or a fact is a matter for the finder of fact

to decide.

- 33 -

Defence of Truth or Justification

[79] The defence of truth or justification pertaining to statements of fact, requires a

defendant to establish that the whole of the defamatory statement is substantially true.

Proving the truth of the “sting” is a complete defence and failure to prove every

defamatory imputation or sting is not fatal to the defence, as some lesser sting that was

pled may be proven.

Defence of Fair Comment

[80] The defence of fair comment requires the finder of fact to conclude that an opinion

was expressed that:

a) Is based on a matter of public interest;

b) Is based on fact;

c) Must be recognizable as comment, even though it can include inferences of

fact;

d) Allows for an affirmative answer to the following question on an objective

basis: could any person honestly express the opinion on the proven facts?

e) Even if honestly expressed on an objective basis, the comment cannot justify

a finding of fair comment if the defendant was [subjectively] actuated by

express malice. (A finding of malice defeats the defence of fair comment).

(See WIC Radio Ltd. v. Simpson, 2008 SCC 40 (CanLII), [2008] 2 S.C.R. 420,

at para. 28.)

- 34 -

Qualified Privilege

[81] The CBC withdrew its defence of qualified privilege at the start of the trial and I

will make no further comment about this defence in my reasons.

Defence of Public Interest Responsible Communication

[82] In Grant the Supreme Court of Canada expanded the available defences to

defamation because the existing law at that time offered no protection for statements of

fact on matters of public interest that could not be proven to be true, even though it was

in the public interest that the statements be disseminated. The defence demands

affirmative answers to two different questions:

a) Can the judge conclude that the publication is on a matter of public interest;

and

b) Is the finder of fact satisfied that the defendant has shown that they were

diligent in trying to verify the allegation(s) having regard to all of the

circumstances.

Are the News Stories Defamatory?

[83] The CBC agrees that the News Stories refer to and identify Mr. Muzik and

that they were communicated to a third party. That only leaves the third

essential element of defamation in dispute, namely if the News Stories would

tend to lower the plaintiff’s reputation in the eyes of a reasonable person. In

Bou Malhab v. Diffusion Métromédia CMR inc., 2011 SCC 9 (CanLII),

[2011] S.C.R. 214, at para. 36, the Supreme Court of Canada adopted the “right-thinking

person standard” as articulated by Abella, J.A. (as she then was) in Color Your World

- 35 -

Corp. v. Canadian Broadcasting Corp., 1998 CanLII 1983 (ON CA), 38 OR (3rd) 97,

leave to appeal refused, at para. 36:

[36] …

The standard of what constitutes a reasonable or ordinary member of the public is difficult to articulate. It should not be so low as to stifle free expression unduly, nor so high as to imperil the ability to protect the integrity of a person's reputation. The impressions about the content of any broadcast — or written statement — should be assessed from the perspective of someone reasonable, that is, a person who is reasonably thoughtful and informed, rather than someone with an overly fragile sensibility. A degree of common sense must be attributed to viewers. [p. 106]

[84] The Supreme Court went on in Bou Malhab, at para. 37, to cite

Brown, Raymond E., The Law of Defamation in Canada, 2nd ed. (loose-leaf updated

2010, release 2), vol. 1 (Scarborough, Ont.: Carswell, 1999), at pp. 5-45 to 5-57, in

support of how the perspective of an ordinary person is to be assessed:

[37] . . .

The court will assume that the ordinary reasonable person is someone who is thoughtful and informed, and of fair, average intelligence. They are persons who have a common understanding of the meaning of language and who, in their evaluation of the imputation, entertain a sense of justice and apply moral and social standards reflecting the views of society generally. . . .

The reasonable reader or listener makes an effort to strike a balance between the most extreme meaning the words will bear and the most innocent meaning. . . .

“The ordinary reader will draw conclusions from general impressions.” He or she is likely to read an article casually or uncritically and not give it concentrated attention or read it a second time. . . .

[citations omitted]

[85] Apart from the churning allegation raised in the opening statement of counsel for

the CBC, which was not repeated in final argument, the CBC also admitted that certain

words in the New Stories were capable of being defamatory under the third essential

element of the defamation. In summary those admissions are:

- 36 -

a) Words spoken by the news anchor and Mr. Worthington at the opening of the

First Broadcast, juxtaposed to a chyron reading “Is your money safe?,” namely:

“Tonight, a financial advisor under investigation for years, but his clients

didn’t know it.”

“I trusted him completely, that was my biggest mistake.”

“They [the Worthingtons] filed a formal complaint with the Manitoba

Securities Commission saying it all started when he handed his pension

over to an investment advisor.”

b) Words spoken by Ms. Sawicka and Mr. Worthington during the course of the

feature story that was in the First Broadcast, namely:

“I trusted him completely. That was my biggest mistake.”

“Last year Bill noticed his $600,000.00 pension was more than half gone.”

“Bill and his wife started investigating and noticed Muzik was keeping

incorrect documentation about him.”

c) The First Article:


“His investments dropped by more than $300,000.00, forcing him to sell

his house and look for work again.”

“Worthington alleged that he then discovered the files Muzik kept about

him contained false information – his assets and income had been

inflated.”

- 37 -

[86] The CBC disputes that there are other words in the News Stories that are capable

of a defamatory meaning.

The Legal Test

[87] In Level One Construction Ltd. v. Burnham, 2019 BCCA 407 (CanLII), the

British Columbia Court of Appeal sets out the legal test with respect to the definition of

defamatory words as follows, at para. 33:

[33] Two distinct questions must be answered in order to determine if a statement is defamatory: 1) are the words reasonably capable of having a defamatory meaning; and, if so, 2) do the words used have a defamatory meaning. The first is a question of law and the second is a question of fact: Northwest Organics, Limited Part[n]ership v. Fandrich, 2019 BCCA 309 at para. 62; Kazakoff v. Taft, 2018 BCCA 241 at paras. 21–22.

[88] Botiuk v. Toronto Free Press Publications Ltd., 1995 CanLII 60 (SCC), [1995]

3 S.C.R. 3, at para. 62, teaches:

62 For the purposes of these reasons, it is sufficient to observe that a publication which tends to lower a person in the estimation of right-thinking members of society, or to expose a person to hatred, contempt or ridicule, is defamatory and will attract liability. See Cherneskey v. Armadale Publishers Ltd., 1978 CanLII 20 (SCC), [1979] 1 S.C.R. 1067, at p. 1079. What is defamatory may be determined from the ordinary meaning of the published words themselves or from the surrounding circumstances. In The Law of Defamation in Canada (2nd ed. 1994), R. E. Brown stated the following at p. 1-15:

[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 a defamatory meaning by way of innuendo different from that in which it ordinarily 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.

[89] Taseko Mines Limited v. Western Canada Wilderness Committee,

2017 BCCA 431 (CanLII), describes that an assessment as to whether a statement is

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defamatory is to be judged by the “natural and ordinary meaning” of the words

themselves:

[42] The applicable test of whether words are defamatory has been stated in a variety of terms. The defamatory meaning must be one which would be understood by reference to an ordinary and reasonable person, and not a meaning by someone who may be naturally inclined to attribute the best or worst meaning to words published about the plaintiff. The impugned words must be construed in their natural, normal, ordinary, plain, usual, fair, obvious, and commonly accepted sense. This is not an exhaustive list of appropriate adjectives, but an illustration of the applicable test: Raymond E. Brown, Brown on Defamation-Canada (Toronto: Thomson Reuters, 1994) (loose-leaf updated 2017, release 4), ch. 5 at 3, 16-23.

[90] In Lawson v. Baines, 2012 BCCA 117 (CanLII), at para. 13, the British Columbia

Court of Appeal set out three ways in which defamation can be proved:

[13] . . .

a) If the literal meaning of the words complained of are defamatory;

b) If the words complained of are not defamatory in their natural and ordinary meaning, but their meaning based upon extrinsic circumstances unique to certain readers (the “legal” or “true” innuendo meaning) is defamatory; or

c) If the inferential meaning or impression left by the words complained of is defamatory (the “false” or “popular” innuendo meaning).

[91] If a plaintiff, like Mr. Muzik, is arguing in support of the inferences or impressions

the words leave with a right-thinking viewer or reader, Level One teaches, at para. 36:

[36] Here, the appellants rely on the inferential meaning or impression as set out in the allegations in the amended notice of civil claim. As explained in Lawson, at para. 23, when this means of proof is relied upon, the meaning must be determined objectively and no evidence concerning the meaning of the words is admissible:

[23] The meaning of the remainder of the words complained of was determined by the trial judge, based upon the inferential meaning or impression left by the words complained of. Reliance on this means of proof requires that the meaning is that which the ordinary person, without special knowledge, will infer from the words complained of and this meaning must be determined objectively. Evidence concerning what the reasonable and ordinary meaning of the words is, or the sense in which they might be understood, or of facts giving rise to the inferences to be drawn from


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the words is inadmissible if this means of proof is relied upon: see Hodgson v. Canadian Newspapers Co. (1988), 1998 CanLII 14820 (ON SC), 39 O.R. (3d) 235 (Gen. Div.), varied on appeal as to damages (2000), 2000 CanLII 14715 (ON CA), 49 O.R. (3d) 161 (C.A.), leave to appeal dismissed (2001), [2000] S.C.C.A. No. 465 at para. 37, and the authorities referred to therein.

[92] Where a defamatory statement is published via television or radio, regard must be

given to the visual effects in conjunction with any accompanying text. As stated in

Raymond E. Brown, Brown on Defamation: Canada, United Kingdom, Australia,

New Zealand, United States, 2nd ed. (Toronto: Thomson Reuters Canada Limited, 1999)

vol. 1 (loose-leaf updated 2016, Release 3), at p. 5-284:

… Only by considering the text in conjunction with the accompanying visual images can one understand the possible emotive impact of the story, as it is the juxtaposition of the audio and visual elements that conveys the meaning intended. …

[93] Leenen v. Canadian Broadcasting Corp., (2000) 2000 CanLII 22380 (ON SC),

48 O.R. (3d) 656 (S.C.J.), aff’d (2001), 54 O.R. (3d) 612 (C.A.), leave to appeal dismissed

[2001] S.C.C.A. No. 432 (QL), describes the nature of the inquiry when statements are

made in a television program:

[48] Thus, in assessing whether a television program is defamatory, it is not simply the words as literally spoken that are to be considered, rather it is the entire thrust and effect of the program that must be evaluated including the overall impression left with viewers, and in that regard one must look at the actual words used together with the image, sound and sequence.

[94] Moreover, the special nature of the television and radio media means that the

ordinary and reasonable person will likely only listen or watch the publication once. As

such, in assessing whether a statement is defamatory, it must be kept in mind that the

public is more likely to indulge in a certain amount of “loose thinking.” (See Brown on

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Defamation: Canada, United Kingdom, Australia, New Zealand, United States, at

pp. 5-285 and 5-289 to 5-292.)

[95] In cases involving more than one allegedly defamatory publication, the

circumstances may be such that they are required to be read together to

determine the defamatory meaning. As stated by the Court in Weaver v. Corcoran,

2017 BCCA 160 (CanLII), at paras. 78-79 and 83:

[78] In Brown on Defamation, 2nd ed. (Toronto: Carswell, 1999) (loose-leaf updated 2014, release 5) vol. 1, Professor Brown outlines the circumstances in which multiple statements and other materials may be read together to illuminate meaning. He explains that statements on a related subject which refer to one another should generally be read together when determining the allegedly defamatory meaning of impugned words. For example, a story or caption on the front page of a newspaper should be read in combination with the article to which it refers, even though the article itself is found elsewhere in the newspaper. Similarly, where provisions of one document are cited in another, depending on the circumstances and issues for determination, it may be appropriate to read the two together to ascertain the meaning of impugned words.

[79] Professor Brown also explains that a primary source of alleged defamation and other materials may form part of the same context for purposes of evaluating defamatory meaning. The surrounding circumstances and contemporaneity of the other material with the primary source should be considered to see if they are so intimately connected as to affect the way in which the impugned words would be understood. If so, they should be read together for meaning. This proposition stems from a decision of the Supreme Court of Western Australia, Brown v. Marron, [2001] WASC 100. In Brown, Owen J. stated, at para. 56:

There must be an intimate connection between the primary source of the alleged defamation and the other material which is said to form a part of the context. The primary and secondary sources must be so closely connected, interwoven or enmeshed that it is necessary to take them effectively as one transaction in order to arrive at the true import and meaning of what was written and said. The requisite degree of intimacy will usually … demand contemporaneity. It will be necessary to consider all of the surrounding circumstances to decide whether the secondary materials are so intimately connected with the primary sources that they are to be taken to be a part of the context which might affect the way in which the ordinary reasonable reader would understand the words complained of.

. . .

[83] As is apparent from the foregoing, the circumstances in which multiple publications may be read together to determine allegedly defamatory meaning of

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impugned words are limited by logic, case law and the pleadings. In my view, where separate publications are pleaded as independent causes of action, absent referability or other inextricable linkage, the meaning of each should be determined independently, in the immediate context in which the words are used. Where the meaning of a publication, so interpreted, is non-defamatory, its meaning cannot logically be altered by a subsequent publication. However, if one publication is referenced in or otherwise closely connected to another publication, depending on the pleadings, issues and circumstances of the case, it may be appropriate to read them together to ascertain their combined meaning.

The Defamatory Meanings in this Case

[96] The CBC has acknowledged the obvious in both its opening statement and in

closing argument that many of the words in News Stories are capable of defamatory

meaning. This answers the first question that forms part of the legal test as to the

definition of defamatory words in the affirmative. That leaves me to answer only the

second question as to what, if any, defamatory meanings the News Stories convey. In

order to evaluate the defamatory meaning in this case, I must consider all of the News

Stories together to ascertain their cumulative impact.

[97] Similar to a headline above the fold on the first page of a newspaper that refers

to an article on page two, the introductory comments by the news anchor at the start of

the First Broadcast were inextricably linked to the feature story about Mr. Worthington’s

complaint with respect to Mr. Muzik that followed moments later. The First Article is

rooted in the First Broadcast by offering a summary of Ms. Sawicka’s report.

[98] The defamatory expression in this case arises not only from the natural and

ordinary meanings of the words complained of, but by way of inferences and impressions

from the full context of the News Stories when scrutinized as a whole. I am satisfied on

an objective basis that when the News Stories are assessed in their entirety and in

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context, the statements complained of are capable of imputing dishonest and deceitful

conduct on the part of Mr. Muzik.

[99] The core of the CBC publications defamatory import are contained within the

following statements:

a) In the First Broadcast:

“Is your money safe?” (shown on a chyron during the introductory

comments of the news anchor)

“Tonight, a financial adviser under investigation for years, but his clients

didn’t know it.”

“I trusted him completely, that was my biggest mistake.”

“Our top story tonight has to do with your hard-earned savings. Bill

Worthington expected retirement would mean taking it easy. Now he

and his wife are in a battle they never expected. They filed a former

complaint – a formal complaint with the Manitoba Securities Commission

saying it all started when he handed his pension over to an investment

adviser.”

“Last year Bill noticed his $600,000.00 pension was more than half gone.”

“Bill and his wife started investigating and noticed Muzik was keeping

incorrect documentation about him.”

“Biggest mistake I made was pulling my money. Should have just left it

in the pension fund. We wouldn’t be sitting here having this interview.”

“I didn’t want to go into high risk where I’m worrying every day.”

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b) In the First Article:


“His investments dropped by more than $300,000, forcing him to sell his

house and look for work again.”

“Worthington alleged that he then discovered the files Muzik kept about

him contained false information – his assets and income had been

inflated.”

“As for Worthington, he said he hopes to retire again someday.”

[100] In arriving at this conclusion as to the defamatory meaning, I am not simply taking

the words at face value into account. It is the effect of the imagery, including the head

shot of Mr. Muzik from his online profile juxtaposed with the dramatic music overlaying

the First Broadcast and the words “Is your money safe?”, followed by the news anchor’s

comments “Our top story tonight has to do with your hard-earned savings.” When

this sensationalized introduction of the top story in the First Broadcast is considered in

context with the rest of the story, it is objectively reasonable to think that a reasonable

viewer would understand that was not a story about a lack of regulatory oversight in the

financial industry or the risks of commuting a private pension, but rather the danger

posed to investors by a dishonest and unethical financial advisor like Mr. Muzik.

[101] My consideration on an objective basis about what kind of impressions the News

Stories would make in the mind of a typical viewer about Mr. Muzik, I am also giving

consideration to:

The tone used by the news anchor’s introduction;

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The fact that the substance of the complaint made by the Worthingtons is only

introduced after they are described as being in a “battle” with Mr. Muzik;

The fact that only a portion of the surreptitiously recorded meeting between

the Worthingtons and Mr. Muzik was used in the First Broadcast, without

proper explanation to the audience that the full recording was not made

available to the CBC and that the Worthingtons refused to disclose it to the

CBC; and

The fact that the interview with the Director of the MSC was introduced

immediately after the short excerpt taken from the incomplete surreptitious

audio recording. This placement of the Director’s interview gave added weight

to the Worthingtons’ allegations.

[102] I have given due consideration to the principle that I am not permitted to select

the harshest and most extreme meaning of words along a spectrum of possible meanings

because the test is that of what a reasonable and fair-minded viewer understands and

not a viewer looking to question the reputation of the plaintiff. My focus is on what an

ordinary viewer would infer what the words mean on an objective basis in the full context

of the tone, sequence, visual images and sound effects used in the First Broadcast. I am

not prepared to engage in a tautological exercise, suggested by the CBC, that would

require me to parse out the individual words and phrases as a lawyer might when

interpreting a contract or a statute. That would be an exercise in studying individual

trees and ignoring the forest.

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[103] Similarly, the CBC cannot uses particular words like “under investigation,”

“complaint” or “allegations” as a shield from a finding of defamatory meaning. It is not

reasonable to think that this kind of legal jargon would lead a reasonable viewer

away from the broad effect the words and images convey. Simpson v. Mair and WIC

Radio Ltd., 2004 BCSC 754 (CanLII), sets out the impact of the broad effect on a

reasonable and fair-minded viewer as follows:

[29] In applying the “reasonable and fair-minded viewer” test, the following admonition of Lord Devlin is applicable, from Rubber Improvement Ltd. v. Daily Telegraph Ltd., Same Associated Newspapers Ltd., [1964] A.C. 234 (H.L.), as quoted in Lawson v. Burns (1974), 1974 CanLII 1201 (BC SC), 56 D.L.R. (3d) 240 (B.C.S.C.) at p. 250:

... The lawyer’s rule is that the implication must be necessary as well as reasonable. The layman reads in an implication much more freely; and unfortunately, as the law of defamation has to take into account, is especially prone to do so when it is derogatory.... When an imputation is made in a general way, the ordinary man is not likely to distinguish between hints and allegations, suspicion and guilt. It is the broad effect that counts and it is no use submitting to a judge that he ought to dissect the statement before he submits it to the jury.

[104] I am satisfied that the whole constellation of factors set out above and the actual

words used in the First Broadcast, when considered as a whole, undoubtedly leave the

clear impression that Mr. Muzik:

a) Is untrustworthy or at best incompetent;

b) Did something that was wrong that resulted in Mr. Worthington losing

$300,000, forcing him to sell his home and look for work again;

c) Deliberately and purposefully kept false information about Mr. Worthington;

d) Placed Mr. Worthington into high-risk investments contrary to his instructions;

e) Inappropriately or unethically withheld information from his clients;

f) Did not act with integrity towards his clients and potential clients;

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g) Had a propensity to engage in unethical business practices; and

h) Should cause alarm to members of the public who wanted to protect their

hard-earned savings.

[105] The admissions of the CBC in its opening statement and in final argument and the

analysis of the words in context with all of the other factors I have set out in these

reasons, leads me to conclude that the natural, ordinary and inferential meanings that

arise from the News Stories are that Mr. Muzik is a dishonest person who was guilty of

misconduct in how he handled the financial interests of Mr. Worthington. The suggestion

that a financial advisor like Mr. Muzik is dishonest and lacks integrity in how the financial

interests of a client are managed, constitutes a devastating blow to their professional

reputation. It not only demeans that person in the eyes of colleagues and regulatory

bodies, but also the community at large. In this case, the cumulative effect of the News

Stories was devastatingly defamatory to Mr. Muzik.

Available Defences

The Defamatory Words are Statements of Fact – Not Opinion

[106] Given my finding that Mr. Muzik has proven that the words in the News Stories

were defamatory, the onus shifts to the CBC to successfully raise a defence in order

to escape liability. As a prerequisite to applying the available defences, it is necessary to

determine first whether the defamatory words are statements of fact or comment.

[107] Chopak v. Patrick, 2020 ONSC 5431 (CanLII) confirms, at para. 41:

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[41] … If the defamatory statement is a statement of fact capable of objective proof, then the defence of justification must be considered. On the other hand, if the defamatory sting conveys an expression of opinion then the defence of fair comment may apply: see Downard, Law of Libel in Canada, 4th ed. (LexisNexis Canada, 2018), at paras. 11.27-11.28. …

[108] Northwest Organics, Limited Partnership v. Fandrich, 2019 BCCA 309

(CanLII), teaches, at para. 69, that when the defamatory expression places statements

of fact at issue, there are three possible defences: “substantial truth (justification),

protected context (privilege) and public interest responsible communication.” Conversely,

“where the impugned expression represents an opinion,” the defences of privilege or fair

comment are available to a defendant.

[109] The hallmark of a comment is its subjective nature and is generally accepted to

include “a deduction, inference, conclusion, criticism, judgment, remark or observation

which is generally incapable of proof” (WIC Radio, at para. 26).

[110] This is not a case suited to the literal analysis of individual words and phrases

separate and apart from a contextual analysis of the many other factors I have already

reviewed in these reasons. To repeat, the actual impact of all of the words and phrases

in the News Stories cannot be parsed out like words in a contract or statute and observed

in isolation of the constellation of factors offered to viewers and readers. The innuendo

created by the words used in the News Stories, when considered in their full context,

implies dishonest and deceitful conduct on the part of Mr. Muzik. This means that the

defamatory expression precludes the CBC from relying on the defence of fair comment.

[111] Cunningham J., in Leenen, confirms, at para, 123:

[123] … If the message of the broadcast, therefore, was one of fact, then the defence of fair comment fails. In the present case, if the words and visual images projected create a factual impression, then the defendants cannot rely upon

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the defence of fair comment. If the reasonable viewer takes what is broadcast to be fact, it will not be considered as comment. Thus, in the present situation where we have Ms. Wood portraying Dr. Leenen as someone who publicly supports CCBs and who argues that they are safe, she mixes up fact with comment. Even in the introduction, Dr. Brill-Edwards is spoken of as the whistleblower “who has the facts”.

[112] Barltrop v. Canadian Broadcasting Corp., 1978 CanLII 2145 (NS CA),

86 D.L.R. (3d) 61, involved allegations of dishonesty and professional misconduct where

the court observed, at p. 75:

Here, as in Jones v. Bennett and Bonham and Bonham v. Pure Water, the defence founders because the words found defamatory in meaning and by innuendo are, in my opinion, not comment but are false statements of facts, with the possible exception of Dr. Needleman’s remarks which probably qualify as a mere expression of opinion. The remaining remarks state or imply as a fact that Dr. Barltrop for a price has given false or misleading evidence with unethical disregard for the health of the public. They assert as a fact that he was professionally dishonest. They are therefore not mere expressions of opinion, such as might have been the case had the accusers set forth substantially true facts from which dishonesty might fairly be inferred and had then expressed as their opinion that they thought he was dishonest. I must conclude that the defence of fair comment cannot succeed.

[113] This is not a situation where the CBC is commenting on the conduct of Mr. Muzik

and then expressing an opinion about what he did. In this case the CBC is implying as a

matter of fact that Mr. Muzik was the cause of the dramatic drop in the value of

Mr. Worthington’s investment portfolio. The CBC has therefore moved past mere criticism

and into the realm of accusation, which limits its available defences to substantial truth

(justification) and public interest responsible communication.

Defence of Substantial Truth/Justification

The Opinion of Mr. Boyce

[114] In order to succeed with a defence of substantial truth or justification, the CBC

must prove that the “sting” of the defamatory expression is substantially true. It is not

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enough merely to show the truth of the words. A defendant who relies upon the defence

of justification must also prove the truth of the “sting” or main thrust of the defamatory

statements, as well as any defamatory meaning that is found to arise.

[115] Makow v. Winnipeg Sun et al., 2004 MBCA 41 (CanLII), 184 Man. R. (2d) 97

(Man. C.A.), teaches:

Thus, the statements of fact must be proven to be substantially true in their material allegations, not only in their literal meaning, but also in any inferential or innuendo meaning the statements may be found to bear. It is the sting on the main charge of the libel that must be proven to be true. (citations omitted)

[116] In the main the CBC relied on the expert opinion of Lawrence Boyce to support

their argument that the investment portfolio devised by Mr. Muzik was inherently

unsuitable to meet its purported goal of offering returns substantially similar to what the

defined benefit CP Rail pension would have provided to Mr. Worthington for the rest of

his life. The problem with this argument, in my opinion, is that Mr. Boyce’s critique

of the investment portfolio devised by Mr. Muzik took place after the MFDA investigations

were completed. In its capacity as Mr. Muzik’s regulating body the MFDA had already

fully investigated him on two occasions.

[117] The MFDA Decision (July 20, 2012) informed Mr. Muzik that he failed to provide

Mr. Worthington with a leverage risk disclosure form within the prescribed six-month

period from the time the investment was made. In that decision, the MFDA described

this breach as being of a “minor nature” and that no formal disciplinary proceedings

would follow.

[118] In a second decision set out in a letter dated July 6, 2015, the MFDA advised

Mr. Muzik that its review of 17 client complaints identified that from 2005 to 2007 he

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misrepresented and failed to fully explain the risks and features of commuting the value

of a pension. He also failed, from 2005 to 2008, to individually assess the risk tolerance

of 17 clients and misrepresented the KYC information in their account opening

documents. Although the MFDA described this as a “serious matter” its conclusion was

that it did not merit formal disciplinary proceedings against Mr. Muzik and a “warning

letter” would suffice.

[119] The MFDA never made a finding that any recommendation that Mr. Muzik may

have made to Mr. Worthington to commute his pension was unsuitable. Further, the

MFDA did not find that Mr. Muzik’s advice or recommendations caused Mr. Worthington

to suffer a financial loss or make an unsuitable choice to borrow funds to invest

(leverage). The only inaccuracy in the forms identified by the MFDA pertained to account

opening documents, which Mr. Worthington admitted to completing himself.

[120] In the result, the vast majority of the complaints levied by Mr. Worthington were

found to be unsubstantiated by the MFDA. This included the key complaint advanced by

the Worthingtons as to the lack of suitability of all of the trades made over the course of

the investment portfolio.

[121] In its role as a regulatory body, the MFDA is tasked with oversight and regulation

of financial advisors to ensure that they meet the prescribed standards. It would be

inappropriate for me to second guess the findings of an expert regulatory body and to

disregard its conclusions based on a second opinion from Mr. Boyce. I am satisfied that

the decisions reached by the MFDA are owed deference.

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[122] This court has found before that there can be cases where different experts can

arrive at different conclusions with respect to whether professional conduct failed to meet

the applicable standard of care. In Campbell et al. v. Jones et al., 2016 MBQB 10

(CanLII), Joyal C.J.Q.B. states, at para. 77:

[77] In the present case, the law respecting standard of care relating to the physicians and nurses is not in dispute. However, any discussion of standard of care need acknowledge certain nuances, some of which were noted in Matheson and which may inform the application of any standard of care. In that regard, it should be acknowledged that differences of opinion and practice exist and will always exist in the medical profession. That is so in most professions. That is not to say that when it comes to skill and care, standards are “up for grabs” or that there are not identifiable standards below which a medical practitioner in a given situation must not fall. Rather, it is simply to acknowledge that an expected standard of care in the field of medicine may nonetheless permit differences of opinion as amongst reasonably competent professionals. In other words, there may exist in some circumstances more than one acceptable standard. Indeed, the fact that one body of physicians may advocate a particular standard of care does not mean that a physician is by definition negligent for not adhering to that standard. Courts have long recognized that it is not possible in most instances to say that there is any one answer exclusive of all others to various problems of professional judgment. As was argued by the defendants, a court may prefer one body of opinion to the other, but that is not necessarily a basis for a conclusion of negligence.

[123] The defence of justification cannot succeed based on the opinion of Mr. Boyce that

the investment plan was unsuitable after the MFDA failed to reach such a determination.

Omitting Material Facts

[124] The omission of material facts by the CBC also defeats the defence of justification.

Brown, in The Law of Defamation in Canada, states at 10-37:

A defendant will not be permitted to defend by justification if he or she has omitted facts from his or her publication which, if reported, would create an entirely different impression from the facts reported taken alone.

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[125] I am satisfied the CBC created an entirely different impression in the minds of

fair-minded viewers and readers by failing to report numerous crucial facts in the News

Stories. In particular I note the following crucial facts were omitted in the News Stories:

a) All investors like Mr. Worthington saw considerable decreases in the fair

market value of their investment portfolios during the two bear markets that

preceded the News Stories;

b) Mr. Worthington admitted to having discussed all of the trades in his portfolio

with Mr. Muzik;

c) Mr. Worthington completed the first KYC form;

d) Mr. Worthington repeatedly failed to adhere to the advice Mr. Muzik provided,

namely to invest the full amount of his commuted pension in the investment

portfolio at the very beginning and to pay down his mortgage with his income

tax refunds;

e) Mr. Worthington made a number of unscheduled lump sum withdrawals, which

reduced the value of the portfolio;

f) The CBC was aware of NBF’s comprehensive response letter to

Mr. Worthington’s complaint and they found it to be unsubstantiated;

g) The decision the Worthingtons made to sell their home was motivated by their

desire to move into the home of Leslie Worthington’s mother, so they could

act as her full-time caregivers;

h) Mr. Worthington had not returned to work at the time of the First Broadcast

and was by any degree of logic incapable of retiring again;

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i) The CBC was aware of the PowerPoint slides that formed part of Mr. Muzik’s

presentation to potential clients, included slides about the risks associated with

commuting a pension and those risks might entail a possible return to

part-time work during bear markets and belt-tightening;

j) Mr. Worthington signed a form entitled “Disclosure Document – Borrowing

Money to Buy Investment Funds (Leveraging)” which makes his comment that

he never agreed to borrow funds for investment purposes suspect;

k) Mr. Worthington admitted to signing documents without first having read

them;

l) Mr. Worthington admitted in the excerpts of the secret recording that he was

prepared to go into high-risk investments if he made money on them;

m) The MSC reprimand against Mr. Muzik was part of a negotiated settlement

agreement which concluded a seven-year investigation and included a $15,000

voluntary payment by Mr. Muzik rather than a fine;

n) The Worthingtons deliberately withheld the lion’s share of the secret audio

recording they made without Mr. Muzik’s knowledge from the CBC and the CBC

wholeheartedly accepted the suppression of this information without question

or explanation as to what the Worthingtons were withholding and why; and

o) The CBC failed to report the apparent “loss” of the secret recording by the

Worthingtons (which is not believable to me) after they found out about it.

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[126] I am satisfied that the reporting of these facts would have conveyed an entirely

different impression about Mr. Muzik to reasonable viewers and readers. This blatant

failure by the CBC to disseminate these facts defeats the defence of truth or justification.

Key Factual Statements in the News Stories are not True

[127] Even if I am wrong in arriving at these conclusions, I am satisfied that the CBC

cannot prove that the factual statements in the News Stories are true, let alone the

defamatory meanings that arise from them.

“Last year Bill noticed his $600,000 pension was more than half gone” and “his investments dropped by more than $300,000, forcing him to sell his house and look for work again.”

[128] The use of the word “dropped” connotes a decline in the fair market value in the

investment portfolio attributable to the actions or lack of action by Mr. Muzik rather than

a series of withdrawals that were used by Mr. Worthington to maintain his lifestyle or

benefit his relatives. Mr. Muzik never stated that Mr. Worthington’s portfolio had

“dropped” to $269,409.04 by the end of 2011. The testimony of Mr. Muzik in

cross-examination was that the investment portfolio report of 2011 showed a decline to

$269,409.04.

[129] Further, the evidence adopted by the CBC includes the read-in from Mr. Muzik’s

examination for discovery, in which the CBC adopted the truth of Mr. Muzik’s statement

that the actual drop in value of Mr. Worthington’s investment portfolio was just over

$60,000, which is much less than the $300,000 reported in the News Stories.

[130] In light of this evidence the statements in the News Stories, which would lead the

fair-minded viewer and reader with the impression that Mr. Worthington lost more than

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$300,000 or about half of his pension due to the conduct of Mr. Muzik and never got any

benefit from that money, is nowhere near the truth. The facts show Mr. Worthington

actually withdrew more than $290,000 from the investment portfolio devised by Mr. Muzik

and he had the benefit of that money.

[131] The evidence at trial also shows clearly that the Worthingtons were not forced to

sell their home as a result of the “drop” in the value of their investment portfolio as the

News Stories allege. As I have already noted, the reality is that the Worthingtons sold

their house to permit them to act as full-time caregivers for Leslie Worthington’s mother

in her own home. Ms. Sawicka admitted in cross-examination that she was aware of this

fact and yet deliberately chose to leave it out of the First Broadcast. Again, the impression

left with fair-minded viewers that the Worthingtons were forced to sell their home due to

the conduct of Mr. Muzik was far from the truth.

[132] These misstatements of the facts were not benign or innocent. The innuendo

created by the misstatements strike at the heart of the message the News Stories were

intending to convey, which was that Mr. Muzik was benefitting himself at the expense of

innocent investors like Mr. Worthington, whose retirement dreams were shattered.

[133] Another statement in the News Stores was:

Bill and his wife started investigating and noticed Muzik was keeping incorrect documentation about him and Worthington alleged that he then discovered files Muzik kept about him contained false information – his assets and income had been inflated.

[134] The word “false” when considered in full context connotes an intentional or

deliberate effort to record information about a client which is untrue. Although some of

the information may have been inaccurate and Mr. Muzik admitted to some oversights,

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the CBC has not led evidence demonstrating that the files of Mr. Worthington or the KYC

forms in those files contained information that Mr. Muzik knew was untrue or false.

[135] The expert evidence led by the CBC was the use of gross income on the KYC forms

by Mr. Muzik improperly inflated Mr. Worthington’s income level. Mr. Muzik testified that

he used the gross income of his clients on the KYC forms without consideration of

withholding taxes, withdrawals or tax refunds. The evidence also shows that over the

years the MFDA and the MSC never took issue with how Mr. Muzik reflected the income

of his clients on the KYC forms.

[136] Though they challenged Mr. Muzik’s evidence at trial, by virtue of the read-ins from

the examinations for discovery, the CBC admitted the income of Mr. Worthington was

property reflected on the KYC forms by showing his gross income prior to withholding

taxes, all withdrawals and all tax refunds. At tab 1, page 160 of the CBC’s Brief of

Read-ins, Mr. Muzik was asked:

763 Q. Was there anything else we should be including to calculate his income?

A. No, just the things I mentioned.

“As for Worthington, he said he hopes to retire again someday.”

[137] The reporting of these words in the First Article represent a journey into fantasy

and cannot even remotely be connected to the truth. In order to “retire again,”

Mr. Worthington would have had to have been engaged in the paid work force at that

time. This was clearly not the case and Mr. Worthington had no hesitation in admitting

that he had already retired when the First Broadcast went to air and the First Article was

published.

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“In December, Muzik was ordered to pay a $15,000 fine after the commission reprimanded him for unsuitable investing”

[138] As I have already noted Mr. Muzik was never “fined” by the MSC. This fact is

incontrovertible. The settlement agreement defines the payment as a “voluntary

payment” to the Minister of Finance.

“Everybody’s happy with it, they’re all making money and it’s a good investment thing, and at the time, he never used the word ‘leverage’.”

[139] This is yet another blatantly false statement disseminated in the News Stories.

One of the forms signed by Mr. Worthington dated August 1, 2006, is entitled “Disclosure

Document – Borrowing Money to Buy Investment Funds (Leveraging)”.

The Defence of Public Interest Responsible Communication in the Public Interest

[140] In Grant the Supreme Court of Canada expands on the nature of the defence of

public interest responsible communication as follows

[124] If the defamatory statement is capable of conveying more than one meaning, the jury should take into account the defendant's intended meaning, if reasonable, in determining whether the defence of responsible communication has been established. This follows from the focus of the inquiry on the conduct of the defendant. The weight to be placed on the defendant's intended meaning is a matter of degree: “The more obvious the defamatory meaning, and the more serious the defamation, the less weight will a court attach to other possible meanings when considering the conduct to be expected of a responsible journalist in the circumstances” (Bonnick v. Morris, [2002] UKPC 31, [2003] 1 A.C. 300 (P.C.), at para. 25, per Lord Nicholls). Under the defence of responsible communication, it is no longer necessary that the jury settle on a single meaning as a preliminary matter. Rather, it assesses the responsibility of the communication with a view to the range of meanings the words are reasonably capable of bearing.

[125] Similarly, the defence of responsible communication obviates the need for a separate inquiry into malice. (Malice may still be relevant where other defences are raised.) A defendant who has acted with malice in publishing defamatory allegations has by definition not acted responsibly.

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(3) Summary of the Required Elements

[126] The defence of public interest responsible communication is assessed with reference to the broad thrust of the publication in question. It will apply where:

A. The publication is on a matter of public interest and:

B. The publisher was diligent in trying to verify the allegation, having regard to:

(a) the seriousness of the allegation;

(b) the public importance of the matter;

(c) the urgency of the matter;

(d) the status and reliability of the source;

(e) whether the plaintiff's side of the story was sought and accurately reported;

(f) whether the inclusion of the defamatory statement was justifiable;

(g) whether the defamatory statement's public interest lay in the fact that it was made rather than its truth (“reportage”); and

(h) any other relevant circumstances.

The CBC acted with Malice

[141] It is not difficult to arrive at the conclusion that the CBC acted with malice due in

part on the devastating effect of the read-in by the CBC from the examination for

discovery of Mr. Muzik. The read-in on the issue of malice and adopted by the CBC

as truthful is recorded at tab 2, page 366 of the CBC’s Brief of Read-ins, starting with

question 1586:

Q “So you’re suggesting in the article, the story of November 14th, 2013, which appears just at the bottom of page 7 –

A Yeah

Q: It begins – where CBC reported that you had been denied a licence by the Manitoba Securities Commission, even though that report is true, that that’s an act of malice?

A: Absolutely.

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[142] The questions and answers preceding and following this exchange were redacted

and do not form part of the Brief of Read-ins, so there is no further context I can consider

in assessing this statement.

[143] I was surprised by the fact that the CBC did not make a significant effort to blunt

the impact of this startling admission by leading contradictory evidence on this point.

The authorities on the effect of read-ins that I have already reviewed are clear that the

adoption by the CBC of the truth of the assertion that it absolutely engaged in an act of

malice is ruinous to the defence of public interest responsible communication in the

absence of evidence that might contradict it. Acting with malice, by definition, cannot

be responsible or in the public interest (Grant, at para. 125).

[144] Quite apart from the admission of malice by the CBC there is other evidence that

demonstrates Mr. Muzik has met his burden in proving the CBC acted with malice in a

desire to injure him, or that it acted recklessly in a way that demonstrated indifference

to the truth. In support of my conclusion on this point I note the following:

a) Ms. Sawicka relied on incomplete information provided by the Worthingtons

who clearly had an axe to grind in their “battle” to get compensation from

Mr. Muzik’s former employers. The CBC made absolutely no effort to disclose

the crucial fact that the Worthingtons were deliberately withholding most of

the surreptitious recording they made in their conversation with Mr. Muzik.

The public was never informed why the CBC never challenged the

Worthingtons as to why this evidence was being withheld or if the suppressed

parts of the conversation might support Mr. Muzik’s position;

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b) The CBC made no effort at all to report the alleged “loss” of the full audio

recording after it became aware of this fact, which would be highly damaging

to the credibility of the Worthingtons in the minds of fair-minded viewers and

readers. It is likely that the CBC did not want to report the alleged loss of the

audio recording to the public as it would raise the embarrassing question as to

why the CBC naively accepted the redacted snippets of the conversation from

the Worthingtons without question or an explanation as to their motives in

doing so;

c) The omissions by the CBC in reporting the fact that NBF dismissed the

complaints of the Worthingtons and that the MFDA only issued letters of

reprimand to Mr. Muzik in respect to the complaints against him. None of the

subsequent articles published on the CBC website that mentioned Mr. Muzik

made reference to these crucial facts that would have painted Mr. Muzik in a

more positive light. They simply repeated the allegations made by the

Worthingtons against Mr. Muzik. Evidence was led by Mr. Muzik about much

more severe professional discipline imposed on other financial advisors for

unprofessional and this was not reported by the CBC. That kind of evidence

would have been helpful in understanding where the sanctions against

Mr. Muzik fell on a scale of possible penalties;

d) The failure of the CBC to fully report the conclusions of the MFDA that run

contrary to the narrative presented by the News Stories that Mr. Muzik was a

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predator to innocent investors constitutes a failure by the CBC to meet its own

journalistic standards and practices which state:

When we cover a legal or disciplinary proceeding, we are aware of the importance of reporting its outcome and we treat the persons concerned with dignity.

. . .

When a suspect or a person accused of an offence has been identified in our reporting, we strive to communicate on at least one of our platforms the outcome of legal or disciplinary proceedings when we become aware of them.

e) The treatment by the CBC of the withdrawals made by Mr. Worthington from

the investment portfolio, including unscheduled withdrawals Mr. Muzik advised

against, as the cause of a “drop” of some $300,000 in the value of the

investment portfolio, when in fact the CBC admitted it was a figure closer to

$60,000. The fact that there were two bear markets during the relevant time

frame that impacted all investors was also omitted; and

f) The highly disturbing willingness of the CBC to play the churning card against

Mr. Muzik during the course of the litigation, including settlement discussions

and right up to the start of trial was clearly malicious. The churning allegations

served no legitimate purpose and were fueled by schadenfreude. I cannot see

the cold-blooded threat by the CBC to publically accuse Mr. Muzik of churning

as anything other than the employment of a scorched earth tactic against his

professional reputation in an effort to force him to stand down in his effort

to vindicate his shattered reputation. The fact that the CBC made every

possible effort to distance itself from the report of Professor Betermier and the

churning allegation in the latter parts of the trial, after the CBC emphatically

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played the churning card in open court on day one, bears eloquent testimony

that the fact that the CBC ultimately came to the realization that its litigation

strategy was badly flawed and it had to back away from it.

The Legal Test for the Public Interest in Responsible Communication Defence

[145] Even if I am wrong about my findings that the malicious nature of the defamatory

expression closes the door to the defence of public interest responsible communication,

I would still find that the CBC has not met the legal test for this defence as set out in

Grant.

Public Interest

[146] The “public interest” as set out in the test established by Grant, at para. 105, is

not necessarily something that interests the public:

[105] To be of public interest, the subject matter “must be shown to be one inviting public attention, or about which the public has some substantial concern because it affects the welfare of citizens, or one to which considerable public notoriety or controversy has attached”: Brown, vol. 2, at pp. 15-137 and 15-138. …

[147] Ultimately, the News Stories were not really about the financial risks of commuting

a private pension or risks that investors face with their hard earned savings in the

markets. It was also not about a lack of transparency or foot dragging by regulatory

bodies. The News Stories established a David and Goliath narrative and it was clear who

the hero and the villain in the story were. It was a private dispute between an investor

looking for compensation and a financial advisor who denied wrongdoing, dressed up by

the CBC to look like a matter of public interest.

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Due Diligence

[148] The CBC also fails to meet the due diligence factors that form the second prong of

the test for public interest responsible communication test that the defamatory expression

was made responsibly.

Seriousness of the Allegation

[149] The primary allegation in the News Stories was that Mr. Muzik did something wrong

that resulted in Mr. Worthington losing $300,000, forcing him to sell his home and look

for work again. This allegation is not merely “only moderately serious” as the CBC

suggests. Even a lesser defamatory meaning that might imply misconduct or a lack of

integrity on the part of Mr. Muzik, strikes at the core of his professional reputation. Apart

from theft or churning, there is nothing worse that a financial advisor can be accused of.

[150] The CBC did not meet the high degree of diligence required by highly serious

allegations. In particular:

a) No research was conducted into the strategy underlying the investment plan

devised for Mr. Worthington;

b) Mr. Muzik was not informed in the two voicemails that were left with him prior

to the First Broadcast that the CBC would broadcast snippets of the

surreptitious audio recordings or that a second news broadcast was planned

that would include the complaint of another disgruntled client;

c) As already noted, the CBC failed to obtain the full audio recording or bother to

inquire as to why most of it was being suppressed by the Worthingtons;

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d) No effort was made to report about the contents of the NBF letter dated

May 9, 2012 which the CBC knew about or to challenge the Worthingtons

about the fact that their efforts to obtain compensation were rebuffed; and

e) The CBC did not report on the results of the MFDA investigation that were

disclosed in a letter from the MFDA to Mr. Worthington on July 24, 2015 which

stated in part:

The review of this matter is now complete and Enforcement Department staff has decided not to commence formal disciplinary proceedings against Mr. Muzik, but has taken other disciplinary measures against him. The disciplinary measures taken will be noted in the MFDA’s records and will be available for reference by the MFDA in the future should the need arise.

[Emphasis added]

Status and Reliability of the Source

[151] The fact that Ms. Sawicka and Mr. Rosner found the Worthingtons to be open and

transparent with them does not erase my findings that they were not credible or

reliable sources. The CBC knew that the Worthingtons considered Mr. Muzik to be a

“financial predator” and that they were seeking compensation from NBF. The CBC also

knew that the Worthingtons had failed to disclose the full audio recording of their meeting

with Mr. Muzik without explanation. In short, the CBC knew that the Worthingtons were

making their complaints about Mr. Muzik with a view to obtaining financial compensation

and not to serve the greater public good. As a result of this the CBC was obligated it to

take additional steps to verify the accuracy of the allegations and the integrity of the

Worthingtons, but it chose not to.

[152] The failure of the CBC in this context to obtain the full audio recording from the

Worthingtons or at minimum to question and then disclose why the Worthingtons were

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making a blanket refusal to provide it, represents a critical failure on the part of the CBC

to verify the status and reliability of its primary source. The unquestioning acceptance

by the CBC of the reliability of its primary source in these circumstances and the failure

to disclose to the public that the full recording was being withheld speaks to the eagerness

with which the CBC ran roughshod over the reputation of Mr. Muzik.

[153] Compounding this severe error in judgment and journalistic integrity, was the

subsequent decision of the CBC not to report on the “loss” of the audio recording after

this fact became known during the course of the litigation. This decision was clearly

contrary to the public interest and designed to shield the reputation of its primary source

from scrutiny. Throughout the time of the reporting of the News Stories and the

subsequent litigation, the CBC had no idea what was on the rest of the audio recording.

This constituted not only a breach of its own journalistic standards but also represented

the height of irresponsibility when the professional reputation of Mr. Muzik was hanging

in the balance.

[154] Although the short duration of the First Broadcast (less than three minutes)

demanded hard choices as what to comments or statements could be included, the

CBC had an obligation to report the facts in a fair, balanced and responsible manner.

It failed in that obligation. The comments of Morgan, J. in Bondfield Construction Co.

v. The Globe and Mail, 2018 ONSC 1880 (CanLII), are apposite here:

[62] There is, however, one key ingredient to this defense which gives me pause. It is a requirement of responsible commentary that the Plaintiff’s side of the story was sought and accurately reported. On the record before me, it is not clear that the Globe has met this test. It is, of course, acceptable for investigative reporting to take “a trenchant or adversarial position on pressing issues”, Grant, supra, at para 123; at the same time, “the commentator may not omit to state important or material facts that would falsify or alter the complexion

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of the facts stated in the commentary”: Creative Salmon Co. v Staniford (2009), 2009 BCCA 61 (CanLII), 307 DLR (4th) 518, at para 61 (BC CA).

. . .

[66] That said, I am concerned that some of the Globe’s omissions may have skewed the message of the articles. As indicated, the Globe failed to mention the IO Report which effectively exonerated Bondfield from any allegations of actual wrongdoing (as opposed to the appearance of conflict) in the bidding process. Moreover, it was not until the third article in the series that the Globe made reference to the fact that Bondfield was the lowest bidder that met the required technical score for its proposal. In other words, it is possible that, as in Botiuk, supra, at para 42, “the whole story was not told and as a result misstatements of fact about the [respondent] were published.”

[67] With these omissions, it is possible that the defense of responsible communication might not be available to the Globe. The failure to report important aspects of the claimant’s side of the story “speaks to the essential sense of fairness the defence is intended to promote, as well as thoroughness”: Grant, supra, at para 116. The notion of responsible communication entails responsibility, and material omissions are not responsible to the public interest which the communication is meant to serve.

[155] The CBC omitted numerous material facts that, had they been reported, would

have substantially affected the impression a fair-minded viewer and reader would have

had about Mr. Muzik. All of these considerations support a finding that the CBC cannot

avail itself of the public interest in responsible communication defence.

Damages

1. First Principles

a) General Damages

[156] Given the fact that defamation is a strict liability tort, general damages are

presumed as at the date of publication and are to be awarded at large in an

amount that is “peculiarly within the province of the jury” and not subject to a

cap or ceiling. (See Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC),

[1995] 2 S.C.R. 1130, at paras. 164 and 168.) The Scientology decision also adopts



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the following principle as to how general damages in a defamation action are to be

assessed, at para.182:

182 The factors which should be taken into account in assessing general damages are clearly and concisely set out in Gatley on Libel and Slander (8th ed.), supra, at pp. 592-93, in these words:

SECTION 1. ASSESSMENT OF DAMAGES

1451. Province of the jury. 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 publication, the absence or refusal of any retraction or apology, and “the whole conduct of the defendant from the time when the libel was published down to the very moment of their verdict. They may take into consideration the conduct of the defendant before 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.

[157] Another important consideration with respect to general damages that is confirmed

in the Scientology decision is that damage awards made in other cases by different

juries or finders of fact are not to be applied as precedents. This principle is set out in

Scientology as follows, at para. 187:

187 At the outset, I should state that I agree completely with the Court of Appeal that each libel case is unique and that this particular case is in a "class by itself". The assessment of damages in a libel case flows from a particular confluence of the following elements: the nature and circumstances of the publication of the libel, the nature and position of the victim of the libel, the possible effects of the libel statement upon the life of the plaintiff, and the actions and motivations of the defendants. It follows that there is little to be gained from a detailed comparison of libel awards.

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[158] In Makow v. The Winnipeg Sun et al., 2003 MBQB 56 (CanLII),

172 Man. R. 2(d) 213, aff’d 2004 MBCA 41 (CanLII), 184 Man. R. (2d) 97 (Man. C.A.),

Monnin, J. (as he then was) adopted the following principles enunciated by the trial judge

in Leenen:

[132] In Leenen v. Canadian Broadcasting Corp., supra, Cunningham J., after reviewing a number of cases dealing with the issue of damages, stated, at p. 728:

In attempting to arrive at the appropriate level of general damages in a defamation case, one must always be aware of not only the damage inflicted to a person’s reputation but also the fact that once damaged a reputation is very difficult to restore. Always mindful of the fine balance between freedom of speech and the protection of reputation, once the scales have been tipped through defamation, a plaintiff is entitled to be compensated not only for the injury caused by the damage to his integrity within his broad community but also for the suffering occasioned by the defamation.

[133] Cunningham J. then proceeded to list a number of factors that may be considered in assessing the appropriate level of compensation. They include, for our purposes:

(a) the seriousness of the defamatory statement;

(b) the identity of the accuser;

(c) the breadth of the distribution of the publication of the libel;

(d) republication of the libel;

(e) the failure to give the audience both sides of the picture and not presenting a balanced review;

(f) the conduct of the defendant and defendant’s counsel through to the end of trial;

(g) the absence or refusal of any retraction or apology;

(h) the failure to establish a plea of justification.

b) Aggravated Damages

[159] The Scientology decision offers a neat summary of the law of aggravated

damages in defamation actions:

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(3) Aggravated Damages

(a) General Principles

188 Aggravated damages may be awarded in circumstances where the defendants' conduct has been particularly high-handed or oppressive, thereby increasing the plaintiff's humiliation and anxiety arising from the libellous statement. The nature of these damages was aptly described by Robins J.A. in Walker v. CFTO Ltd., supra, in these words at p. 111:

Where the defendant is guilty of insulting, high-handed, spiteful, malicious or oppressive conduct which increases the mental distress -- the humiliation, indignation, anxiety, grief, fear and the like -- suffered by the plaintiff as a result of being defamed, the plaintiff may be entitled to what has come to be known as "aggravated damages".

189 These damages take into account the additional harm caused to the plaintiff's feelings by the defendant's outrageous and malicious conduct. Like general or special damages, they are compensatory in nature. Their assessment requires consideration by the jury of the entire conduct of the defendant prior to the publication of the libel and continuing through to the conclusion of the trial. They represent the expression of natural indignation of right-thinking people arising from the malicious conduct of the defendant.

190 If aggravated damages are to be awarded, there must be a finding that the defendant was motivated by actual malice, which increased the injury to the plaintiff, either by spreading further afield the damage to the reputation of the plaintiff, or by increasing the mental distress and humiliation of the plaintiff. See, for example, Walker v. CFTO Ltd., supra, at p. 111; Vogel, supra, at p. 178; Kerr v. Conlogue (1992), 1992 CanLII 924 (BC SC), 65 B.C.L.R. (2d) 70 (S.C.), at p. 93; and Cassell & Co. v. Broome, supra, at pp. 825-26. The malice may be established by intrinsic evidence derived from the libellous statement itself and the circumstances of its publication, or by extrinsic evidence pertaining to the surrounding circumstances which demonstrate that the defendant was motivated by an unjustifiable intention to injure the plaintiff. See Taylor v. Despard, supra, at p. 975.

191 There are a number of factors that a jury may properly take into account in assessing aggravated damages. For example, was there a withdrawal of the libellous statement made by the defendants and an apology tendered? If there was, this may go far to establishing that there was no malicious conduct on the part of the defendant warranting an award of aggravated damages. The jury may also consider whether there was a repetition of the libel, conduct that was calculated to deter the plaintiff from proceeding with the libel action, a prolonged and hostile cross-examination of the plaintiff or a plea of justification which the defendant knew was bound to fail. The general manner in which the defendant presented its case is also relevant. Further, it is appropriate for a jury to consider the conduct of the defendant at the time of the publication of the libel. For example, was it clearly aimed at obtaining the widest possible publicity in circumstances that were the most adverse possible to the plaintiff?


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c) Punitive Damages

[160] The Scientology decision also offers a concise summary of the law of punitive

damages, at para. 196:

(4) Punitive Damages

(a) General Principles

196 Punitive damages may be awarded in situations where the defendant's misconduct is so malicious, oppressive and high-handed that it offends the court's sense of decency. Punitive damages bear no relation to what the plaintiff should receive by way of compensation. Their aim is not to compensate the plaintiff, but rather to punish the defendant. It is the means by which the jury or judge expresses its outrage at the egregious conduct of the defendant. They are in the nature of a fine which is meant to act as a deterrent to the defendant and to others from acting in this manner. It is important to emphasize that punitive damages should only be awarded in those circumstances where the combined award of general and aggravated damages would be insufficient to achieve the goal of punishment and deterrence.

[161] The policy reasons underlying awards for punitive damages are also enunciated in

Scientology. Punitive damages are different from aggravated damages insofar as they

are not compensatory or awarded at large. The underlying consideration with respect to

punitive damages is whether they will serve as an effective form of deterrence. “In other

words, was the misconduct of the defendant so outrageous that punitive damages were

rationally required to act as deterrence?” (Scientology, at para. 197). The principle of

deterrence is important in cases where parties with wealth and power persist in

defamatory expression of vulnerable victims, as set out, at para. 199:

199 … Awards of general and aggravated damages alone might simply be regarded as a licence fee for continuing a character assassination. The protection of a person's reputation arising from the publication of false and injurious statements must be effective. The most effective means of protection will be supplied by the knowledge that fines in the form of punitive damages may be awarded in cases where the defendant's conduct is truly outrageous.

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2. Application of the Principles to the Facts of the Case

[162] Mr. Muzik argues that general damages in an amount up to $500,000

are appropriate in this case, while the CBC argues that only nominal general damages

are warranted due to Mr. Muzik’s less than stellar reputation, which was a matter of public

record. An award of $400,000 is also sought by Mr. Muzik for aggravated damages and

punitive damages up to $500,000.

3. General Damages

[163] As to onus with respect to general damages Monnin, J. (as he then was) makes

the following finding in Makow:

140 The onus is upon the defendants to prove that the plaintiff's reputation at the time of the libel was so low that it could not be damaged any further. The law presumes that one starts with an impeccable reputation unless evidence is presented to the contrary. See Wiley v. Toronto Star Newspapers Ltd. (1988),

65 O.R. (2d) 31 (Ont. H.C.), var'd as to costs and aff'd (1990), 74 O.R. (2d)

100 (Ont. C.A.).

[164] The gist of Mr. Muzik’s testimony was that that the News Stories had a devastating

and lasting effect on both his private life and his professional career. In particular,

Mr. Muzik noted that his relationship with his wife became severely strained because of

the News Stories. The strain resulted in Mr. Muzik’s wife moving out of the family home

for a period of time. Fortunately, they were able to reconcile and resume cohabitation.

[165] Almost immediately after the First Broadcast Mr. Muzik attracted persona non grata

status at NBF. Prior to that he described his relationship with NBF as “great.” In

November of 2011 senior management at NBF asked him to move to a different sales

platform, which would allow him to sell financial products that would produce more

income for him. As a result of that, he would no longer be limited to the sale of financial

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products prescribed by the MFDA. Yet within a few days of the First Broadcast,

NBF prohibited him from entering his office or contacting existing or potential clients until

their legal department gave him clearance to do so.

[166] As a result of being, “very distraught” in the days after the First Broadcast and the

First Article Mr. Muzik testified he was unable to eat or sleep properly and he had to seek

professional help to deal with his emotional stress. The feelings Mr. Muzik described was

that his life was “completely out of control” and he suffered headaches and diarrhea

due to lack of sleep and poor eating habits. His physicians prescribed Mr. Muzik

medications for depression, anxiety and acid reflux. The medical advice Mr. Muzik was

given included a restriction on exercising due to high blood pressure which lasted into

the early part of 2013.

[167] Throughout the days immediately after his de facto suspension, Mr. Muzik had no

idea what his staff or his clients were being told about him or when he would be allowed

to return to work and resume his normal business activities. In early August of 2012,

NBF allowed Mr. Muzik to return to his office but he was formally suspended about

six weeks later without written notice. Not long thereafter he was told by senior

management that it would be “best for all concerned” to transfer his book of business

to his associate, Mr. White, who would make a buy-out offer in due course. By

November of 2012 Mr. Muzik was given a termination letter by NBF.

[168] The stress and anxiety caused to Mr. Muzik by all of these catastrophic

developments brought him to the point where he sought out professional advice from the

employee assistance program that was available to him through NBF. I am satisfied that

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Mr. Muzik was truthful in his evidence as to how his personal and professional life spiraled

out of control and that all of this was caused by the defamatory expression in the News

Stories. I do not accept the arguments of the CBC that there was no cause and effect

relationship between the defamatory expression and the devastating deterioration of

Mr. Muzik’s professional and personal life that followed almost immediately after the

First Broadcast. It is farfetched and fanciful for the CBC to argue that Mr. Muzik was

the author of his own misfortune.

[169] The evidence is clear that Mr. Muzik’s reputation as a financial advisor was not

impeccable, but it was not underwater as the CBC suggests. In 2011 Mr. Muzik won an

award for the “Wealth Management Practice of the Year” and was feted by his

professional colleagues at a gala dinner. Although Mr. Muzik did have a long-running

dispute with the MSC, it was resolved by way of the $15,000 voluntary payment with

costs based on his admission that he acted contrary to the public interest prior to the

broadcast and publication of the News Stories.

[170] The CBC makes a lot of this development but it bears repeating that Mr. Muzik was

not accused or charged with fraud or misappropriation of client funds by the MSC. The

voluntary payment and costs would likely have amounted to no more than his legal fees

in a lengthy contested hearing. The decision of the MSC was also a matter of public

record and the evidence shows there was no negative impact on his earnings as a result

of the voluntary payment.

[171] It is also unfair on the part of the CBC to point out that Mr. Muzik was named as

a defendant in numerous actions by multiple clients. Being named as a defendant in a

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civil action should not amount to a finding of misconduct. Further, the naming of

an individual as a defendant is matter of public record that anyone can access through

the on-line court registry and there is no evidence that these law suits impacted his

income earning ability in a negative way.

[172] The CBC also points to the MFDA complaints that were filed prior to the News

Stories in support of its argument that Mr. Muzik had a bad reputation. Again, these

matters arose prior to when the News Stories were published and no effort was made by

the CBC to publish the relatively minor slap-on-the-wrist discipline meted out by the MFDA

after the litigation started. I also note the vast majority of the individual complaints made

by Mr. Worthington were dismissed by the MFDA and not reported by the CBC.

[173] The fact that Mr. Muzik was placed on strict supervision by the MSC in the years

prior to the News Stories with respect to his mutual fund trades were also a matter of

public record and this did nothing to thwart his income earning potential, which was

substantial in the years prior to the defamatory expression of the CBC.

[174] I am satisfied on all the evidence that the calamitous drop in Mr. Muzik’s income,

which I will delve into when I address special damages, was directly related to the News

Stories and it took him years to recover his financial equilibrium. Even today, Mr. Muzik

is still forced to navigate the aftermath of an ongoing storm of negative publicity the

News Stories continue to create because they can be accessed online through the CBC

website or by way of an on-line search of his name.

[175] Although the CBC argued that Mr. Muzik was terminated for cause by NBF,

Mr. Muzik testified the opposite was true and the CBC adopted the truth of his assertion

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through the read-in of his examination for discovery. Moreover, there was evidence

at trial that an associate of Mr. Muzik’s (Mr. White) made an offer to buy-out his

book-of-business (client list) about one month after the First Broadcast. It was clear that

this offer was based on Mr. White’s perception that Mr. Muzik was a vendor in distress as

many of his clients were dropping him as a financial advisor due to the severe blow

the New Stories inflicted on his professional reputation. This constitutes independent

evidence as to how severe the professional and financial impact of the News Stories were

to Mr. Muzik and undermines the argument advanced by the CBC that Mr. Muzik’s poor

reputation prior to the News Stories precludes a meaningful award for general damages.

[176] As noted in the trial decision in Leenen, that was adopted by this court in Makow,

a plaintiff is entitled to general damages as compensation for both the injury caused to

their integrity and their personal suffering as a result of the defamatory expression

(Makow, at para. 132). On the facts before me, all of the factors established for

consideration in the assessment of general damages in Leenen (at para. 133) weigh

heavily in favour of a significant award for general damages. In assessing general

damages, I take particular note of the repetition of the defamatory expression by

the continued publications of news articles about Mr. Muzik on the CBC website. The

persistent publication by the CBC of a narrative about Mr. Muzik that was biased against

him and that painted the Worthingtons as his victims without any thought as to their lack

of credibility or reliability as sources, must attract considerable damages.

[177] I am setting the award for general damages at $400,000.

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4. Aggravated Damages

[178] Animating my finding that aggravated damages are appropriate in this case is that

the CBC took the position throughout the litigation process and right up to the first day

of trial that Mr. Muzik was engaged in churning. That is to say the CBC was explicitly

communicating to Mr. Muzik throughout the litigation process and to the general public

by way of its opening statement on the first day of trial, that Mr. Muzik was lining his own

pockets at the expense of his client. In the context of a professional advisor, this kind of

statement is akin to saying Mr. Muzik was a thief and it could only have served as clear

notice from the CBC that it was prepared to take Mr. Muzik down the road to ruin, both

personally and professionally, if his pursuit of the defamation action continued.

[179] This conduct by the CBC was in my opinion both egregious and outrageous. My

finding is underscored by the fact that the CBC made every effort to avoid any further

mention of the churning strategy it employed in the litigation process after the first day of

trial. One of the core complaints made by Mr. Worthington was that the trades made by

Mr. Muzik did not benefit him. The CBC emphasized this in its opening statement when

its former counsel said the trades seemed to favour Mr. Muzik and implied it had the

evidence to back up this allegation. Yet in the subsequent trial, the CBC did not

rely on the report of Professor Betermier at all and led no evidence that could possibly

sustain a finding of churning. The strategy of the CBC to furiously beat the drum that

churning occurred throughout the litigation process and then utterly fail to even

mention it again following the opening statement and in closing argument is egregious

conduct that showed reckless disregard for the truth. It also constitutes unquestionable

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evidence that the CBC was motivated by actual malice in this case and this aggravated

the injury caused to Mr. Muzik by the defamatory expression. In making an award for

aggravated damages, I am expressing the “natural indignation of the court” to the

conduct of the CBC that accentuated the injury that the defamatory expression caused

(Scientology, at para. 183).

[180] I am awarding Mr. Muzik $400,000 in aggravated damages.

5. Punitive Damages

[181] The CBC has considerable resources and a wide audience as a national

broadcaster. It also has a large footprint in the internet through its website. I do not

accept the argument of the CBC that the News Stories were not a big deal in the grand

scheme of things, as they constituted nothing more than a local interest story in a small

media market. The fact that the News Stories were broadcast and published in Manitoba

where Mr. Muzik lived and worked, makes this much more than a local interest story. It

will be something that lives on forever even if the CBC removes the News Stories from

its website. Anyone with a web browser will be able to find or stumble across the

defamatory expression and in that sense, Mr. Muzik will never be able to escape the reach

of the defamatory expression.

[182] In my view, an award of punitive damages of $250,000 will serve as a deterrent

to the CBC and make it reconsider not only how it goes about broadcasting and publishing

reports about financial advisors or other professionals, but also how it conducts itself in

any later claim for defamation that might emerge.

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6. Special Damages

a) First Principles

[183] Mr. Muzik is seeking special damages with respect to lost income as a result of the

defamatory expression. Focus Graphite Inc. v. Douglas, 2015 ONSC 1104 (CanLII),

offers the following summary as to special damages in the context of a defamation action,

at para. 57:

Special Damages

[57] Special damages are material and temporal losses suffered by a plaintiff as the natural and proximate result of the defamation and capable of monetary measurement. They have a specific economic or pecuniary value and are part of the compensatory award. Unlike general compensatory damages, they are not assumed to be necessary or inevitable, and therefore, must be proved at trial.

[184] There is no dispute between the parties that Mr. Muzik, as plaintiff, bears the

onus of proving his special damages to the standard of the balance of probabilities.

This onus and evidentiary standard that applies in all civil cases is stated in the following

way in F.H. v. McDougall, 2008 SCC 53 (CanLII), [2008 3 S.C.R. 41, at para. 46:

[46] Similarly, evidence must always be sufficiently clear, convincing and cogent to satisfy the balance of probabilities test. But again, there is no objective standard to measure sufficiency. In serious cases, like the present, judges may be faced with evidence of events that are alleged to have occurred many years before, where there is little other evidence than that of the plaintiff and defendant. As difficult as the task may be, the judge must make a decision. If a responsible judge finds for the plaintiff, it must be accepted that the evidence was sufficiently clear, convincing and cogent to that judge that the plaintiff satisfied the balance of probabilities test.

7. Application of the Principles to the Facts

[185] The fact that Mr. Muzik structured his financial affairs in way that ensured his

commissions on sales were paid to two different corporations he controlled makes proof

of income loss a bit of a complex task. Establishing a loss of income in this matter is not

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a matter of looking at pay stubs over a certain period of time and arriving at evidentiary

conclusions by way of extrapolation. Professionals who incorporate can pay dividends to

themselves and their spouses with a view to reducing tax burdens and claim certain

expenses and write-offs that employed individuals cannot.

[186] The basis of Mr. Muzik’s income loss calculation of $2,500,000 is based primarily

on his belief that his assets under management (“AUM”) as at July 1, 2012 were

$75,000,000. The AUM is the main driver of an income loss calculation for a financial

advisor earning commissions income through a corporate tax structure.

[187] The summary as to income loss prepared by Mr. Muzik is as follows:

Revenue (commissions) earned by Muzik Financial Services Inc. Pre-CBC Publications:

2007 $531,497

2008 $422,186

2009 $467,423

2010 $359,057

2011 $394,701

2012 $404,624

$2,579,488

Average earnings pre-CBC Publications: $2,579,488 / 6 years = $429,914.67

Revenue (commissions) of Muzik Financial Services Inc. & Evolution

Private Wealth Management Solutions Inc. post-CBC Publications:

2013 $ 10,970

2014 $ 30,992

2015 $155,215

2016 $133,090 (income earned from July 1, 2015 to

December 21, 2015)

2016 $222,554

2017 $254,588

2018 $245,450

2019 $220,244

$1,273,103 actual income

earned

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Projected income “but for” the CBC

Publications (assuming no growth)

$430,000 (rounded) * 9 years

$3,870,000

Less actual income earned: -$1,273,103

Total Lost Income: $2,596,897

[188] Unfortunately, for Mr. Muzik, he was unable to produce any financial documents

or records listing his clients and their respective investment balances as at the date of

the First Broadcast that would support an AUM figure of $75,000,000. Instead, he just

used that figure as a starting point based on what he remembered he had been told by

someone else. Mr. Muzik did not call an accountant or actuary to testify in support of his

claim for special damages.

[189] The CBC on the other hand, produced a report prepared by Nancy Rogers, who is

a Chartered Professional Accountant and Chartered Business Evaluator. Mr. Muzik did

not challenge the qualifications of Ms. Rogers as an expert in her field. I found Ms. Rogers

to be a credible witness, who gave her evidence fairly and in a straightforward manner

in keeping with her duty as an expert witness to give her evidence without bias or favour.

[190] The exclusive focus of Ms. Rogers’ professional practice for most of the past

30 years has been forensic accounting and litigation assignments, including analysis and

quantification of economic damages, valuations and investigations. The qualifications of

Ms. Rogers as an expert in her field have been accepted in over a dozen trials and many

private arbitrations, the majority of which included expert testimony on income loss

issues.

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[191] The general approach adopted by Ms. Rogers in the calculation of the income loss

rested on the key assumption that the CBC did in fact defame Mr. Muzik and this caused

him to lose income. The income loss calculation was intended to establish how much

money was necessary to place Mr. Muzik back into the same financial position he would

have been “but for” the defamatory expression. In order to do that, Ms. Rogers calculated

the difference between Mr. Muzik’s estimated profits (revenues less expenses) that he

would have earned but for the defamatory expression and his actual profits earned.

[192] Ms. Rogers developed a complex model to calculate lost profits, complete with

numerous charts and graphs that juggled all kinds of variables. The variables included

not only historical trends but also other factors that included, but were not limited to,

business expense claims (since Mr. Muzik paid his own staff and was constantly cultivating

new potential clients), taxes, normal attrition rates resulting from clients leaving for

reasons unrelated to the defamatory expression (i.e. death) and how his commission

rates would have been different under the new platform he was contemplating for sales

at the time he was terminated by NBF. Certain expenses were not included in the model

prepared by Ms. Rogers, including the legal fees paid by Mr. Muzik to pursue his

defamation claim.

[193] The most important chart in the expert report of Ms. Rogers (Exhibit 40), in my

view, was the lost profit calculation at page 32, which is reproduced below:

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Estimated Financial Results but for the

Alleged Actions of CBC

Actual Financial Results

Pre-Tax Income

Loss

Fiscal Year

Ended June 30

But For

Commissions

Net Profit

Before

Tax

Actual

Commissions

Earned

Net Profit

Before

Tax

$ Sch 2 $ Sch 1 $ Sch 4 $ Sch 4 $ Sch 1

For Info Only

2013 302,639 187,636 10,970 (55,491) 243,127

2014 323,612 200,639 30,992 (18,805) 219,444

2015 338,518 209,881 155,215 107,940 101,941

Three Year Loss 598,157 197,177 33,644 564,513

2016 329,493 204,286 244,367 173,077 31,209

2017 315,378 195,535 238,571 181,853 13,682

Total Loss as at

June 30, 2017

$609,403

Table 1

[194] The above noted chart shows the precipitous decline in actual commissions earned

by Mr. Muzik as at June 30, 2013 (the first full fiscal year end after the First Broadcast)

in contrast to what he would have been expected to earn but for the defamatory

expression. The model showed pre-tax income losses in each fiscal year from 2013 to

2017 totalling $609,403. This was the figure established by Ms. Rogers as Mr. Muzik’s

income loss given her conclusion that by July 1, 2018 Mr. Muzik was able to earn income

in an amount greater than he would have earned but for the defamatory expression. I

accept the estimate shown in the model that Mr. Muzik’s income loss was $609,403 and

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that by July 1, 2018 he was able to mitigate his losses and enjoy the level of income he

had prior to the defamatory expression.

[195] Ms. Rogers disputed the income loss calculation created by Mr. Muzik for several

reasons, the most significant of which was that his model was based on what he

considered to be “revenue loss” rather than “income loss.” The method used by

Ms. Rogers used to establish income loss is predicated on the “but for” analysis she

employed in arriving at her income loss calculation of $609,403 and it is the standard

method used by business valuators.

[196] In final arguments, counsel for Mr. Muzik conceded the model developed by

Ms. Rogers was good but her assumptions were a series of worst-case scenarios for

Mr. Muzik who worked diligently to rebuild his career in a different area of the financial

planning industry during the years following the defamatory expression. The argument

advanced by Mr. Muzik was that if certain key assumptions were more generous in his

favour, the model developed by Ms. Rogers revealed projected income loss figures

between $1.5M and $2M. The key assumptions that required adjustment according to

counsel for Mr. Muzik were AUM, rates of return, attraction of new clients and the attrition

rate of existing clients.

[197] Ms. Rogers confirmed the key driver of an income loss calculation is AUM and she

used a figure of $63M for AUM based on her analysis of the financial records disclosed by

Mr. Muzik, which included an offer made by his associate at NBF, Mr. White, to buy out

Mr. Muzik’s book of business (client list) by way of an email dated July 19, 2012. In that

email Mr. White highlighted the names of certain clients he managed to speak to who

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had “lost trust” in Mr. Muzik and were switching advisors and others who were

contemplating doing so. Mr. White noted some clients had already given notice of their

intention to switch to a different advisor before he even had a chance to speak to them.

[198] The offer made by Mr. White included a valuation conducted by NBF on Mr. Muzik’s

“book” rounded to $650,000, “…which was equal to approximately what [his] last two

years Gross Revenue was which is the multiple that National Bank offers.” Mr. White

added $100,000 as a premium to bring his offer to $750,000 for Mr. Muzik’s book of

business. This offer was rejected.

[199] Mr. White made a point of highlighting that he knew Mr. Muzik “was under

considerable pressure” due the volatility of his client base in the days following the First

Broadcast. Mr. White also commented, “… there may be too much damage to your brand

to allow you to pick up the business you need to keep the value of your book and I want

to offer you another option which can enable to you receive the best value possible.”

[200] It is not disputed that Ms. Rogers was correct in her analysis that Mr. White’s offer

was based on an AUM calculation of $60M. In her report, Ms. Rogers concluded that an

AUM assumption of $63M was reasonable based on the financial records made available

to her, which included the offer from Mr. White and a different offer from another financial

advisor. Ms. Rogers concluded based on the available financial records that the $75M

AUM figure used by Mr. Muzik was not realistic. I agree with Ms. Rogers’ conclusion on

this point and accept her methodology of establishing what the loss of income was.

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[201] As to the assumptions in the income loss model developed by Mr. Muzik, I agree

with Ms. Rogers that his methodology to establish income loss was oversimplified for

several reasons including:

- Using revenue generated by his practice as a base line without factoring in

expenses to arrive at net revenues;

- Using raw average revenue (or the fee line) from his financial statements at

times and net fees at other times which precludes an “apples-to-apples”

comparison;

- Including 2007 as a year to establish an average, which was a year in which

he earned significantly higher fees than his historical average;

- Inadequate consideration of the cost structures inherent in his corporate

models;

- The impending drop of 5 per cent commissions that would have resulted in his

plan to switch to a new sales platform in the summer of 2012, which had

nothing to do with the defamatory expression;

- No allowance for client attrition unrelated to the defamatory expression; and

- The deduction of salaries his corporations paid to him and his wife.

[202] I agree with counsel for Mr. Muzik that the details of Mr. White’s offer include

assumptions we cannot be certain about since Mr. White was not called as a witness and

Mr. Muzik was perceived as a vendor in distress by Mr. White. These facts suggest a fair

market offer would not be likely. However, the fact remains that that Mr. Muzik bears

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the onus of establishing what his AUM was and that his assumptions in establishing

income loss were reasonable.

[203] It is not sufficient for Mr. Muzik to say his AUM was $75M based on what someone

at NBF may have told him at some earlier time. In these circumstances, I agree with

Ms. Rogers it is the most reliable evidence before me as to AUM after it is analyzed in

conjunction with the offer of Mr. White in context with all of the other financial data. I

also accept Ms. Roger’s analysis of income loss developed through the application of the

variables she used and I accept her evidence as to income loss.

[204] Although I agree that the model developed by Ms. Rogers offers a fair and

reasonable basis to establish what Mr. Muzik’s income loss was, I do not agree with the

CBC that Mr. Muzik’s claim for special damages should be rejected in its entirety, since I

have come to accept the income loss model offered by Ms. Rogers and I have rejected

the model developed by Mr. Muzik. The CBC argued that if it was able to refute

Mr. Muzik’s evidence as to income loss, I should find that Mr. Muzik was not entitled to

special damages at all.

[205] Evidentiary findings are not a zero sum game. The old adage that finders of fact

can accept all, none or some of the evidence of any witness comes into play here. My

acceptance of the methodology to calculate income loss presented by the model created

by Ms. Rogers, does not invalidate all of the evidence as to income loss presented at trial.

It just means I preferred the income loss model relied on by the CBC over the model

presented by Mr. Muzik. On the basis of the evidence I do accept, I am satisfied that the

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income loss of Mr. Muzik due to the defamatory expression was $609,403 and I am

making an award of special damages in that amount.

Summary and Conclusion

[206] The News Stories constitute defamatory expression of Mr. Muzik by the CBC and

the CBC was unable to meet its burden to prove one of the available defences. Mr. Muzik

is entitled to damages as follows:

General damages $ 400,000

Aggravated damages $ 400,000

Punitive damages $ 250,000

Special damages $ 609,403

Total $1,659,403.

[207] Counsel did not make arguments as to pre-judgment interest or costs. If they are

unable to agree on same, they should prepare written briefs and schedule a contested

hearing before me.

REMPEL J.