TORONTO — A journalist's contempt conviction for protecting a confidential source was overturned Monday by Ontario's highest court after media lawyers successfully argued there was a constitutional question at stake.

Hamilton Spectator reporter Ken Peters was found in contempt after he refused to reveal a source during a civil trial in 2004.

While all sides at his appeal agreed the trial judge failed to follow procedure in finding Peters in contempt, media lawyers squared off against counsel for the Ontario Attorney General on whether there was a constitutional question at stake.

The media lawyers took the position that the courts should do their best to obtain evidence from other sources before compelling a journalist to reveal a source, in light of freedom-of-speech rights enshrined in the Charter of Rights and Freedoms.

The Attorney General argued it wasn't necessary to drag the Constitution into the appeal as contempt and common law, when followed properly, provide the same direction.

On Monday, the Ontario Court of Appeal stopped short of granting blanket protection for reporters who protect sources but did rule that the Charter applies to matters of journalist-informant confidentiality.

"I am unable to accept the submission of the Attorney General for Ontario urging us to decide this case without reference to the Charter,'' the judgment reads.

"Charter rights and values are at stake.''

Because the confidentiality of a journalist's sources implicates the Charter, "every effort should be made to minimize the impact upon those rights and values,'' the judgment added.

The court also agreed that forcing reporters to divulge confidential sources can have a "chilling effect'' on sources and news gathering.

"It is sufficiently apparent that the likely effect of revealing a journalist's confidential source will be to discourage, from coming forward, other potential sources,'' the judgment reads.

The decision was hailed by the Canadian Association of Journalists as a significant victory.

"It gives us one more case to look at where the courts have (ruled) on the side of source protection, which doesn't always happen,'' said association president Mary Agnes Welch.

"It's really good news, especially after the McIntosh decision.''

Last month, the Appeal Court ordered the National Post to surrender documents, received by journalist Andrew McIntosh, at the heart of conflict-of-interest allegations against former prime minister Jean Chretien.

In doing so, the court ruled that enforcing the law must, at times, outweigh the need to protect an anonymous source.

"There is no blanket shield law (to protect journalists' sources),'' said Welch.

"We think there should be. Without one, we're going to keep having to go case-by-case and fighting on the merits.''

Peters, the Hamilton Spectator reporter, was called to testify in a $15.5-million dollar civil suit launched by the St. Elizabeth Villa retirement home against the former Hamilton-Wentworth Region, the city and the former mayor.

He was found in contempt after he refused to disclose the identity of a person who was present when he received documents alleging abuses at the retirement home.

Former city alderman Henry Merling eventually admitted to being the source of the information.

Peters could have been sent to jail, but was instead ordered to pay $31,600 in legal costs -- costs that were set aside by Monday's ruling.