Court of Appeal for Ontario

Date: February 20, 2019

Docket: C64197 and C65260

Judges: Doherty, Pardu and Nordheimer JJ.A.

Parties

Between

United Soils Management Ltd. Plaintiff (Appellant)

and

Katie Mohammed Defendant (Respondent)

AND BETWEEN

United Soils Management Ltd. Plaintiff (Appellant)

and

Kayt Barclay Defendant (Respondent)

Counsel

William A. Chalmers, for the appellant

Jean-Marc Leclerc and Sabrina Callaway, for the respondents

Heard: February 11, 2019

On appeal from: the order of Justice Thomas R. Lederer of the Superior Court of Justice, dated July 25, 2017 with reasons reported at 2017 ONSC 4450, and the order of Justice Janet Wilson of the Superior Court of Justice, dated April 19, 2018, with reasons reported at 2018 ONSC 1372.

Reasons for Decision

Introduction

[1] These appeals were heard together and thus we provide one set of reasons addressing both appeals. We will set out the facts of each case and then engage in our analysis as it relates to both cases.

Katie Mohammed

[2] The appellant provides site remediation, excavation and special materials disposal services throughout southern Ontario. It has operated a gravel pit near Stouffville since 2007.

[3] In late August 2016, the Whitchurch-Stouffville Town Council approved an amendment to the appellant's license that expanded its dumping rights at the gravel pit site and, in particular, allowed it to dump material collected from small quantity sites and from hydro-vac trucks.

[4] Some people, including two members of the Town Council, expressed concerns that the amendment permitted the dumping of material in the site that could compromise the long term integrity of the local water supply. There were long-standing concerns about the safety of the water supply in the community.

[5] Both respondents shared these concerns. Ms. Mohammed took to Facebook. She posted and commented on two private Facebook group pages over about a three day period. In at least three of those postings or comments, she referred to the dumping of the material from the hydro-vac trucks into the gravel pit site as potentially "poisoning our children".

[6] A few days after the first postings, Ms. Mohammed received a letter from the appellant's lawyer demanding an immediate retraction and apology. The letter also contained a libel notice.

[7] On the same day, Ms. Mohammed deleted the word "poison" from the various Facebook postings and added a comment to each post retracting her "defamatory and slanderous statements". She also apologized. A day or two later, she received the appellant's statement of claim alleging libel and seeking damages of $100,000. The appellant also sought aggravated damages of $10,000; punitive damages of $10,000; special damages in an amount to be determined; and costs on a substantial indemnity basis.

[8] Ms. Mohammed brought a motion under s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the "CJA") for an order dismissing the appellant's action. The motion judge allowed the motion and dismissed the appellant's claim. He found that:

• Ms. Mohammed's statements related to a matter of public interest under s. 137.1(3) of the CJA.

• The appellant had failed to meet its onus under either s. 137.1(4)(a)(i) (the substantial merit provision) or s. 137.1(4)(a)(ii) (the valid defense provision).

• The appellant had also failed to meet its onus under s. 137.1(4)(b) (the public interest balancing provision).

[9] The motion judge awarded damages to Ms. Mohammed pursuant to s. 137.1(9) in the amount of $7,500.

[10] Finally, the motion judge awarded costs of the proceeding to Ms. Mohammed on a full indemnity basis. In doing so, he applied the "presumption" in favour of costs on a full indemnity basis set out in s. 137.1(7). The motion judge fixed those costs at $122,286.94. The costs were referable to the entire proceedings and included about $30,000 in costs awarded on three motions that the appellant had brought earlier in the course of the proceedings.

[11] The appellant appeals from the judgment dismissing the action, claiming legal errors in respect of each step of the motion judge's analysis under s. 137.1. The appellant also appeals from the damage award to Ms. Mohammed. The appellant further seeks leave to appeal from the costs order. It does not contend that the motion judge erred in awarding costs on a full indemnity basis, but argues that the quantum is so excessive as to warrant appellate intervention.

Kayt Barclay

[12] As was the case with Ms. Mohammed, Ms. Barclay was also concerned about the activities of the appellant. In a Facebook group, she posted a message in which she said that a councillor, who had voted in favour of the amendment, was "in the pocket of United Soils".

[13] Less than four hours after the Facebook post was made, the President of the appellant personally e-mailed Ms. Barclay, copying United Soils' lawyer. He told Ms. Barclay that he had instructed his lawyer to sue her for libel and that he "looked forward to that process."

[14] Two days later, Ms. Barclay received, by process server, a letter enclosing a Notice of Libel and demanding that she "immediately post, for the period of seven consecutive days, a public retraction and apology" on Facebook. The Notice of Libel alleged that Ms. Barclay's words were made with the intention of "bringing political pressure against United Soils."

[15] Ms. Barclay deleted the Facebook post. She was not able to post the requested retraction and apology because the Facebook group was shut down. Days later, Ms. Barclay was served at her home with a statement of claim, claiming damages of $100,000 for libel; aggravated damages of $10,000; punitive damages of $10,000; special damages in an amount to be determined; and costs on a substantial indemnity basis.

[16] Ms. Barclay also moved under s. 137.1 to dismiss the action against her. The motion judge allowed the motion and dismissed the appellant's action. She found that Ms. Barclay's post related to a matter of public interest; that the appellant had not met its onus of proving that its claim had substantial merit (as in her view Ms. Barclay's post was not defamatory with respect to the appellant); that, in any event, the appellant had not proved that Ms. Barclay had no valid defence to the proceeding; and, finally, that the appellant had failed to prove that it had suffered, or was likely to suffer, any harm, such that the public interest in permitting the proceeding to continue outweighed the public interest in protecting Ms. Barclay's expression.

[17] The motion judge awarded Ms. Barclay $20,000 in damages pursuant to s. 137.1(9). She also awarded Ms. Barclay her full indemnity costs, pursuant to s. 137.1(7), in the amount of $126,438.55.

[18] The appellant appeals from the motion judge's order dismissing its action against Ms. Barclay. As in the companion appeal with respect to Ms. Mohammed, it argues that the motion judge erred in her analysis with respect to s. 137.1 in dismissing its action against Ms. Barclay. It also challenges the motion judge's damages and costs awards.

Analysis

[19] Both motion judges heard and decided the s. 137.1 motion before this court released a series of judgments interpreting s. 137.1 in some detail: see 1704604 Ontario Ltd. v. Pointes Protection Association, 2018 ONCA 685, 142 O.R. (3d) 161 and the related cases that were released simultaneously. Some of the motion judges' analyses have been overtaken by Pointes and those related authorities.

[20] In light of the significant developments in the case law since the motion judges released their reasons, we see no need to engage in a detailed consideration of those reasons. Whatever may be said about the correctness of their analyses in respect of s. 137.1(4)(a) (the substantial merit and valid defense provisions), the appellant cannot succeed on these appeals unless it satisfies this court that the motion judges each reached the wrong conclusion in respect of s. 137.1(4)(b), the public interest balancing provision.

[21] Section 137.1(4)(b) required the motion judges to dismiss the appellant's lawsuits unless the appellant could demonstrate that the harm suffered by it, or likely to be suffered by it, as a result of the respondents' statements was sufficiently serious that the public interest in permitting the appellant's lawsuit to go forward outweighed the public interest in protecting the respondents' freedom of expression. This court considered the factors relevant to the balancing process described in s. 137.1(4)(b) in Pointes, at paras. 85-98; Able Translations Ltd. v. Express International Translations Inc., 2018 ONCA 690, at paras. 37-44; and Fortress Real Developments Inc. v. Rabidoux, 2018 ONCA 686, 426 D.L.R. (4th) 1, at paras. 42-52.

[22] Any monetary damages suffered by a plaintiff, or likely to be suffered by a plaintiff, as a consequence of alleged defamatory statements is a key feature in the assessment of the harm suffered or likely to be suffered by the plaintiff: Pointes, at para. 88. The appellant offered no evidence of any monetary damage suffered by it. While damages are presumed if defamation is established, there is no presumption about the nature or quantum of that damage. On this evidence, there is no reason to think that any damages awarded to the appellant would be anything more than modest, if not nominal.

[23] Nor is there any evidence of any reputational harm done to the appellant's business. There is no suggestion that the appellant, a corporation, suffered any damage to, or was likely to suffer any damage to, its business reputation as a result of the respondents' Facebook posts.

[24] The extent of any harm suffered or likely to be suffered by the appellant is also significantly diminished by the very limited circulation of the alleged defamatory comments. In both instances, they were posted only for a few days and to a limited audience of likeminded individuals also concerned about potential damage to the environment.

[25] Further, in the case of Ms. Mohammed, the timely and unqualified apology, and retraction of the offensive portions of her posts, is a crucial factor in assessing harm caused or likely to be caused to the appellant. The apology goes a long way to eliminating any possible future harm to the appellant's reputation from the posts. To the extent that the appellant claims to have taken legal action to vindicate its good name, the unqualified and timely apology by Ms. Mohammed would seem to achieve that vindication.

[26] While the appellant can point to little, if any, harm or potential harm, both respondents make a strong case for protecting their freedom of expression. The statements related to a matter of significant public importance. They were also part of an ongoing political dialogue in the local community. Democracy thrives through open and public debate on matters of public policy. Strong citizen involvement in those debates can only strengthen our democracy. Although both respondents can properly be criticized for the particular words used – "poisoning our children" and "in the pocket of United Soils" – there can be no doubt that both the subject matter of their concerns, and the manner in which they advanced those concerns, constituted expression that engaged the public interest.

[27] The appellant has the onus of demonstrating that the harm suffered or likely to be suffered by it was sufficiently significant to show that the public interest in allowing the appellant to proceed outweighed the public interest in protecting the respondents' expression. On these records, the appellant cannot meet that onus in either case.

[28] The proceedings were properly dismissed on the basis that the respondent had not met its onus in respect of s. 137.1(4)(b).

Damages

[29] A separate issue arises on both of these appeals and that is the proper application of s. 137.1(9). That section reads:

If, in dismissing a proceeding under this section, the judge finds that the responding party brought the proceeding in bad faith or for an improper purpose, the judge may award the moving party such damages as the judge considers appropriate.

[30] The motion judge awarded Ms. Mohammed damages of $7,500. In doing so he found that prior motions brought by the appellant were "an objective demonstration of improper purpose": Mohammed, at para. 78. The motion judge also pointed out that the appellant instituted the proceeding notwithstanding that Ms. Mohammed had apologized, as demanded by the appellant. He found that this was "a continuation of its desire to intimidate": Mohammed, at para. 78.

[31] In fixing the amount of damages, the motion judge noted that there was no medical evidence in support of Ms. Mohammed's claim that she suffered stress as a result of the proceeding being instituted against her. He also noted that there was no other corroborating evidence of any adverse effects on Ms. Mohammed. Nevertheless, the motion judge accepted that the proceeding unnecessarily caused Ms. Mohammed stress that affected her day-to-day life: Mohammed, at paras. 79-80.

[32] In the case of Ms. Barclay, the motion judge awarded her damages of $20,000. The motion judge found that the action was brought in bad faith and for an improper purpose "of stifling public debate around a crucially important public issue": Barclay, at para. 136. The motion judge found that Ms. Barclay had suffered "personal anguish" as a result of the action: Barclay, at para. 136.

[33] The motion judge also found, in the alternative, that s. 137.1(9) would permit an award of punitive damages in the same amount. She found that the appellant's conduct "warrants denunciation and deterrence": Barclay, at paras. 134, 136.

[34] The wording of s. 137.1(9) is somewhat problematic. On one view, the wording of s. 137.1(9) would seem redundant, as a finding that an action has been commenced for the purpose of unduly limiting expression on matters of public interest would seem to qualify as one that has been brought for an improper purpose. On another view, the wording of s. 137.1(9) could be seen as an effort to separate out a subset of SLAPP cases which go beyond simply reflecting an effort to limit expression and include active efforts to intimidate or to inflict harm on the defendant.

[35] A review of the "Anti-SLAPP Advisory Panel Report to the Attorney General", dated October 28, 2010, supports the latter interpretation. In that report, the Advisory Panel recommended, at para. 46:

[T]he court should not be required to make findings as to bad faith or improper motive on the part of the plaintiff in deciding a motion under the special procedure. If in a particular case, however, the court is satisfied on the record before it that an action has been brought in bad faith or for an improper motive, such as punishing, silencing or intimidating the defendant rather than any legitimate pursuit of a legal remedy, an additional remedy should be available for this improper conduct. In such circumstances, the court should have the power to award damages to the defendant in such amount as is just. [Emphasis added].

[36] We would make two observations regarding the approach taken by the motion judges in these cases with respect to this issue. First, we do not view it as necessary for a defendant to adduce medical evidence in order to support a claim for damages. While medical evidence might be of assistance in determining the proper quantum of damages to be awarded, in certain cases, such as the ones here, it may be presumed that damages will arise from the use of a SLAPP lawsuit. Both of the respondents were individuals inexperienced in litigation, who would understandably suffer the stress and anxiety associated with being the subject of a proceeding of this type. This is especially true given the intimidating nature of the conduct of the appellant.

[37] That observation does not mean that damages will naturally follow in every case where the action is dismissed. The exact limits to the circumstances justifying an award of damages must await further development of the law surrounding s. 137.1. Whether an award of damages is warranted should also take into account the presumption that costs will be awarded on a full indemnity basis. Such an award may, in some cases, address the harm to a defendant that arises from a SLAPP proceeding.

[38] Second, we do not view the wording of s. 137.1(9) as being so broad as to encompass punitive damages awards. In our view, the thrust of s. 137.1(9) is to provide compensation for harm done directly to the defendant arising from the impact of the instituted proceeding. The section is not intended to provide wide-ranging authority for the court to sanction the conduct of the plaintiff through a damages award, such as an award for punitive damages. Any need to sanction the conduct of the plaintiff is already addressed through the provision in s. 137.1(7) of a presumptive award of full indemnity costs.

[39] All of that said, we do not see any basis for interfering with the damages awards that were made in either of these cases. There was evidence of harm to Ms. Mohammed and Ms. Barclay arising from these proceedings. Each of the motion judges gave reasons for the conclusions that they reached regarding the quantum of damages to be awarded. There is no palpable and overriding error in either of their conclusions that would warrant intervention by this court.

Costs

[40] In each of these appeals, the appellant sought leave to appeal the costs award made. In each instance, the appellant submits that the amount of costs awarded was excessive and that the motion judges failed to carry out the requisite analysis of the costs claimed and determine whether those costs were reasonable.

[41] We do not see any grounds, much less strong grounds, on which we could conclude that either of the motion judges erred in exercising their discretion in fixing costs such that leave to appeal should be granted: Brad-Jay Investments Ltd. v. Szijjarto, 218 O.A.C. 315 (C.A.), at para. 21; Sawdon Estate v. Watch Tower Bible and Tract Society of Canada, 2014 ONCA 101, 119 O.R. (3d) 81, at para. 77. It was acknowledged that the motions were complex and that considerable time was spent on them. The amounts awarded, given that they were on a full indemnity basis, were not unreasonable.

[42] We do, however, agree with the appellant that there remains an obligation on a motion judge, when determining the quantum of costs under s. 137.1(7), to undertake the same type of analysis that is required when fixing costs in any other context. Just because the award is on a full indemnity basis does not mean that the successful party is entitled to whatever costs were incurred. The quantum must still be fair and reasonable for what was involved in the particular proceeding: Boucher v. Public Accountants Council for the Province of Ontario, 71 O.R. (3d) 291 (C.A.), at para. 26. The award must also be proportionate to the importance and complexity of the issues, and to the amount involved, in the proceeding: see r. 1.04(1.1), Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

Conclusion

[43] The appeals are dismissed. The motions for leave to appeal from the costs awards are dismissed. The respondents are entitled to the costs of the appeals, each in the amount of $30,000, inclusive of disbursements and HST.

"Doherty J.A."

"G. Pardu J.A."

"I.V.B. Nordheimer J.A."