Court of Appeal Clarifies Corporate Defamation Damages
3
minute read
Jul 11, 2025
published in
Appeals
Jacob R. W. Damstra
Partner
This article was originally published in Law360 Canada.
The Court of Appeal for Ontario recently provided important guidance on the proper measure of damages for defamation of a corporate plaintiff in James Bay Resources Limited v. Mak Mera Nigeria Limited, 2025 ONCA 448. The case also involved contract interpretation issues, which are not discussed in this article, except to say that this case provides the most recent comment and concise summary from the Court of Appeal on standard of review and governing principles for contractual interpretation,[1] implying contractual terms,[2] and finding that the trial judge erred in both interpretation and implication of terms, allowing the appeal on those grounds.
Background
James Bay Resources Limited (“James Bay”), an Ontario corporation, sought to enter the Nigerian oil and gas sector, a market requiring foreign entities to partner with indigenous Nigerian companies. To this end, James Bay engaged Mak Mera Nigeria Limited (“Mak Mera”) and its president, Adewale Olorunsola (“Sola”), under two successive agreements. These agreements provided for both monetary compensation and share issuance to Mak Mera in exchange for services rendered in pursuit of oil and gas opportunities in Nigeria.
James Bay paid Mak Mera a total of US$405,000 for its services. The business relationship soured, culminating in Mak Mera sending a letter to the Nigerian Department of Petroleum Resources (“DPR”) and Shell, accusing James Bay of breaching their agreement and suggesting that Mak Mera had been defrauded. This letter requested DPR suspend the award of a key oil mining lease to James Bay.
James Bay ultimately failed to secure any oil and gas contracts in Nigeria and abandoned its efforts. It sued Mak Mera and Sola, seeking repayment of US$405,000 and damages for defamation arising from the complaint letter.
Superior Court Decision – 2023 ONSC 6844
James Bay succeeded at trial. The trial judge characterized the US$405,000 as advances contingent on the success of James Bay’s ventures and ordered repayment. On the defamation claim, the judge found that the complaint letter was defamatory, that the defences of fair comment and qualified privilege were defeated by malice, and awarded James Bay $200,000 in damages for defamation. The trial judge’s assessment of damages was based on the seriousness of the allegations, the audience (the DPR and Shell), the perceived impact on James Bay’s reputation and business prospects, and the absence of an apology or retraction.
The Court of Appeal’s Analysis on Defamation Damages
Mak Mera and Sola appealed, challenging both the contractual interpretation and the quantum of damages for defamation. The appellants did not dispute the defamation finding but argued that the damages awarded were excessive and unsupported by evidence, and that only nominal damages were appropriate.
The Court of Appeal’s analysis contains an instructive discussion on the assessment of damages in corporate defamation cases.
The Court of Appeal reaffirmed the highly deferential standard of review for damage awards in defamation, but noted that appellate intervention is warranted where the award is inordinately high or unsupported by evidence.[3] The central question is whether the amount awarded is reasonably required to compensate the company for reputational harm and to publicly clear its name.[4]
While damages are presumed upon proof of defamation, the Court of Appeal emphasized that there is no presumption as to the quantum or impact of those damages. For corporate plaintiffs, substantial damages are unlikely absent proof of special damages or at least general loss of business or goodwill. Unlike individuals, corporations cannot recover for hurt feelings or aggravated damages.[5]
The Court of Appeal found that the trial judge’s award of $200,000 was inordinately high and unsupported by admissible evidence. The trial judge had relied on speculative inferences, such as the assertion that the complaint letter caused the DPR to pre-empt James Bay’s bid, and that James Bay’s withdrawal from Nigeria was due to reputational harm. However, there was no direct evidence from the DPR, Shell, or other industry participants to substantiate these claims. The only evidence was that the letter was sent to the DPR and Shell, with no proof of further publication or actual impact on James Bay’s business or reputation.
The Court of Appeal also noted that James Bay’s ventures in Nigeria were inherently risky and that its lack of success could not be attributed to the complaint letter. The trial judge’s findings of reputational and economic harm were therefore speculative and not grounded in the evidence.[6]
A significant basis for the trial judge’s assessment of damages was the absence of an apology or retraction, which she treated as an aggravating factor justifying a substantial award. The Court of Appeal clarified that, for corporate plaintiffs, the absence of an apology does not, by itself, justify substantial or aggravated damages.[7] Indeed, the Court of Appeal said that “A corporate plaintiff cannot be awarded aggravated damage.[8] While an apology may mitigate harm, its absence is only relevant insofar as it fails to attenuate the seriousness or ongoing impact of the defamation. Substantial damages may be warranted where there is widespread, ongoing, and destructive defamation, but not merely because an apology was not forthcoming.[9]
The Court of Appeal reviewed leading authorities, including Walker v. CFTO Ltd.,[10] Second Cup Ltd. v. Eftoda,[11] and Barrick Gold Corporation v. Lopehandia,[12] and explained that the assessment of damages must consider all relevant circumstances: the nature and gravity of the defamation, the extent of publication, the conduct of the defendant, and the actual impact on the plaintiff. In the absence of evidence of loss or significant impact, nominal damages are appropriate, and the judgment itself serves the vindicatory function for the corporate plaintiff.[13]
The Court of Appeal allowed the appeal, set aside the $200,000 award, and substituted nominal damages of $1,000. The Court held that, given the limited publication and absence of proven loss or impact, a substantial award was unwarranted. The judgment itself, together with nominal damages and costs, was sufficient to vindicate James Bay’s reputation.[14]
Significance
This decision provides a clear reaffirmation of the principles governing damages in corporate defamation cases. It underscores the necessity of evidentiary support for a corporation’s damages flowing from the defamation to warrant anything more than mere nominal damages, the limited role of apology in the corporate context, and the importance of distinguishing between injury to reputation and injury to feelings. The judgment serves as a caution against speculative or punitive damages in the absence of proven harm, and reinforces the centrality of evidence-based assessment in defamation claims involving corporate plaintiffs.
[1] James Bay Resources Limited v. Mak Mera Nigeria Limited, 2025 ONCA 448, at paras 39-42.
[2] James Bay, at paras 60-61.
[5] James Bay, at paras 79-80.
[6] James Bay, at paras 81-90.
[9] James Bay, at paras 93-94, 98.
[10] Walker v. CFTO Ltd. (1987), 1987 CanLII 126 (ON CA), 59 O.R. (2d) 104 (C.A.).
[11] Second Cup Ltd. v. Eftoda (2006), 41 C.C.L.T. (3d) 111 (Ont. S.C.).
[12] Barrick Gold Corporation v. Lopehandia (2004), 2004 CanLII 12938 (ON CA), 71 O.R. (3d) 416 (C.A.).
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