April 20, 2012
1654766 Ontario v. Stewart and The Globe and Mail

Background

On June 30, 2008, the Globe and Mail published an article by its then financial reporter, Sinclair Stewart, about the on-going negotiations in the proposed takeover of BCE. Stewart had written several articles already, describing the deal’s progress and many of his articles relied on information provided by several unnamed confidential sources. Jeffrey MacIntosh, a University of Toronto law professor and expert in corporate and securities law, alleged that the article caused him to lose money in a securities transaction he made through a numbered company. MacIntosh was seeking to have the identities of the confidential sources identified so that they could be named in a proposed class action that includes BCE and others as defendants. MacIntosh had been unsuccessful in his earlier attempt to get the Ontario Securities Commission to investigate what he alleged were “misrepresentations” by the confidential sources, and a breach of the Ontario Securities Act.

Decision Summary

In his ruling Justice Belobaba dismissed the application for a Norwich order, which would have compelled the Globe and Mail journalist to disclose the confidential sources he relied on for a series of articles about the attempted leveraged buy-out of BCE in 2008 by a private equity consortium led by the Ontario Teachers’ Pension Plan. At para. 74 of his ruling, Belobaba J. states:

There may well be cases where the information provided by the confidential financial sources is in contravention of securities law and a claimed journalist-source privilege will be trumped by a greater public interest in the criminal investigation and prosecution of wrong-doers. This is not that case.

The court examined two lines of analysis in order to determine whether disclosure of the confidential sources should be granted. Belobaba J. first looked at the criteria that must be satisfied by the applicant, Mr. MacIntosh, in the Norwich test:

[32] In order to satisfy the five-part Norwich test, the applicant must show that: (i) it has a valid, bona fide, or reasonable claim; in cases such as this where freedom of expression interests are involved, the first-level hurdle has been raised and the applicant must show a prima facie case; (ii) the respondents are somehow involved in the acts complained of; (iii) the respondents are the only practicable source of the information; (iv) the respondents can be indemnified for any costs of the disclosure; and, (v) the interests of justice favour the obtaining of the disclosure.

Belobaba J. then examined the criteria, at para. 33, that must be satisfied by the journalist in the four-part Wigmore test:

(i) the relationship originated in a confidence that the source’s identity will not be disclosed; (ii) anonymity is essential to the relationship in which the communication arises; (iii) the relationship is one which should be sedulously fostered in the public interest; and (iv) the public interest served by protecting the identity of the informant outweighs the public interest in getting at the truth.

Belobaba J. cites an earlier judgment, from the Supreme Court of Canada, in R. v. National Post, 2010 SCC 16, in which the Court acknowledged the “special position of the media” and the importance of protecting confidential sources. But, he also cites another Supreme Court judgment, Globe and Mail v. Canada (Attorney General) [“Groupe Polygone”], 2010 SCC 41, which leaves the door open to disclosure of confidential sources, under certain circumstances.

Justice Belobaba finds that the question of whether or not the disclosure of the confidential journalistic sources will be court-ordered depends on the facts of the particular case and which public interest should be served. When examining the competing interests in this case, Belobaba J. concluded:

[70] The public interest evidence favouring the protection of the respondents’ confidential sources is strong and compelling for the following reasons:

• The “special position of the media” and the Supreme Court’s admonition that “the public interest in free expression will always weigh heavily in the balance;”
• The level of alleged wrong-doing is very low; the most that can be said is the sources’ statements possibly breached securities law;
• The OSC enforcement staff reviewed the allegations and declined, in the public interest, to investigate;
• Professor MacIntosh himself acknowledged in his two op-ed pieces that his allegations may be baseless; that maybe there was no wrong-doing at all; and that “the chain of events may be perfectly innocent;”
• The BCE leveraged buy-out was a matter of national, even international, interest and importance. News reports about when or whether the transaction would close were clearly in the public interest. It is relevant to note the respondents’ coverage of the BCE deal was nominated for a National Newspaper Award, an award that recognizes excellence in journalism on topics in the public interest.