Court of Appeal for Ontario

Date: March 29, 2019 Docket: C64409

Justices: Doherty, Pardu and Nordheimer JJ.A.

Between

Jerry Bradwick Montour and Grand River Enterprises Six Nations Ltd. Plaintiffs (Respondents)

and

Beacon Publishing Inc., o/a Frontline Safety & Security, Frontline Security Magazine, Edward R. Myers, Christina MacLean, Philip Murray, Scott Newark, Martin Rudner, John Doe and Jane Doe Defendants (Appellants)

Counsel

Colin Baxter and Julie Mouris, for the appellants

Ryder Gilliland and Amanda McInnis, for the respondents

Heard

February 14, 2019

On Appeal

On appeal from the order of Justice Harrison S. Arrell of the Superior Court of Justice, dated November 20, 2017, with reasons reported at 2017 ONSC 4735.

Pardu J.A.

[1] The defendants appeal from the decision of the motion judge refusing to dismiss this defamation action pursuant to s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C. 43, the "Anti-SLAPP provisions". For the reasons that follow, I would dismiss the appeal.

A. Factual Overview: The Publication

[2] The appellant Beacon Publishing Inc. published an article written by the appellant Edward R. Myers in a magazine entitled "FrontLine Security". The appellant Christina MacLean is the owner, general manager and editor of the magazine. The other appellants appeared on the masthead of the publication as members of the editorial board, but appear to have had no knowledge of or involvement in the publication. The respondent, Grand River Enterprises Six Nations Ltd. ("GRE") is a large manufacturer of cigarettes, and Jerry Montour is its CEO.

[3] The publication is in a glossy magazine style format, and has the appearance of a professionally produced publication. There is a banner across the top of the front cover reading "Public Safety, Security, Enforcement, Emergency Management." Below that is the title "FrontLine Safety & Security", followed by a large print heading meant to indicate the contents of the publication, "Illicit Tobacco Why is it a Big Deal?" followed by "The World Stage", "Canada's Tobacco Roads" and "Courses of Action": FrontLine Security 11: Special Edition (2016).

[4] The overall thrust of the publication is that contraband tobacco is associated with organized crime, smuggling and terrorism. This is made clear in the opening page of the magazine, at p. 3:

Last year in Canada, "organized crime" syphoned off nearly $3 billion from the Canadian tax base, according to experts. Without this fraud, taxpayers would be able to use that money for their own benefit rather than bolstering the crime kingpins who support ancillary activities such as weapons trafficking and human sex slavery. Some of the proceeds of illicit tobacco have been tracked to international terrorists and mass murderers like Mokhtar Belmokhtar (aka "Mr. Marlboro"). January 2016 saw him take the lives of six humanitarian workers from Quebec during the Burkina Faso massacre of more than 20 innocent tourists. In 2008, he famously kidnapped and held Canadian diplomat, Robert Fowler, for 130 days.

From a simple economic perspective, the threat of contraband tobacco may be counted in terms of a lost tax stream. However, even more dire economic consequences are at risk in our trading relationships around the world. Heads of State in several Latin American countries have seen their local economies jeopardized by illicit tobacco from Canada. These foreign jurisdictions deal with the drug cartels of infamy. Their partnership with Canadian smugglers allows the cartels to fuel their operations through cheap, tax-free cigarette revenue from Canada.

The law enforcement community acknowledges that more – not less – needs to be done to monitor the movement of all tobacco in Canada. The sources of raw tobacco used for contraband cigarette production are largely from either Southwest Ontario or the Eastern U.S. (North Carolina and Virginia).

While partisan politics saw the death of this initiative, the proposed study is important. Recent law enforcement activities have unearthed a dangerous network of organized criminal groups that handle different parts of an international smuggling ring that starts in the tobacco growing fields in Canada and the U.S., then moves to the manufacturing operations on aboriginal reserves, and finally makes its way into the international smuggling networks.

[5] This theme is reinforced by multiple, prominent references connecting terrorism and tobacco smuggling.

[6] Part 2 of the publication focuses on Canada, and links criminal activity to contraband tobacco, at p. 9:

In the past five years, some progress has been made but much of the status quo continues. Moreover, some disturbing new trends are emerging that suggest our internal challenges have leaked across our borders and are causing problems to governments and communities abroad. To make matters worse, last year some provinces increased the tax on tobacco products and the federal government recently announced plans to introduce plain packaging. While these and other measures go far in regulating lawful products, they are, in fact, welcomed by the criminal element as an opportunity to gain further competitive advantages in the marketplace. In this section, as we look at how the illicit trade of tobacco is currently positioned within our borders, our focus is almost exclusively on illicit cigarettes manufactured in Ontario and Quebec and the factors driving this criminal and lucrative trade.

[7] Specific references to the respondent corporation follow. Immediately beside the above passage, linking crime to cigarettes manufactured in Ontario, is a photograph of "Putter's" cigarettes, a brand manufactured by the respondent corporation with the caption "Do you smoke contraband cigarettes?" and showing the results of an online poll conducted by a newspaper.

[8] The publication goes on to connect the respondent corporation to smuggled goods in Costa Rica and in Mexico, at pp. 18-19:

Costa Rica

A team of journalists from Costa Rican newspaper, Diario Extra, travelled to Canada to investigate the growing trend of cigarettes being smuggled into their country. Specifically, the team visited Grand River Enterprises, a tobacco manufacturer on Six Nations in Ohsweken, Ontario. The report by Diario Extra suggested that Grand River Enterprises is known by Costa Rican authorities in connection with smuggled products and organized crime. An official quoted by the newspaper says there have been an increasing number of investigations involving the Seneca brand of cigarettes, which is manufactured by Grand River Enterprises, and that it "was becoming one of the biggest smuggled goods in our country."

Mexico

Another media outlet in Mexico, El Financiero, picked up on the same theme and published a 7-minute exposé for television on the problem of contraband tobacco in Mexico. The report indicates that 17% of cigarettes sold in Mexico are contraband, and contends that the main supplier is Grand River Enterprises, a manufacturing plant in Six Nations.

The El Financiero report estimates that 1.87 million of Mexico's population is supplied by contraband cigarettes. This is a dedicated market and a lucrative base that is being exploited by criminal enterprise for illicit gain. For many in Canada's political system, it is important that they become informed and understand the direct links of this criminal activity to Canada's legislation, regulation and other government polices.

[9] Finally, at p. 23, the publication went on to connect both respondents to black market cannabis cultivation:

Fanning the Flames

Diversifying the Black Market

In July last year, Vice News reported that federal law enforcement officers in the United States seized more than 12,000 cannabis plants from two farming operations on tribal land in California. The connection to Canada is that the operation was allegedly financed by Jerry Montour, CEO Grand River Enterprises, a cigarette manufacturer based in Six Nations, Ontario. The article suggests that Montour's alleged connection is one of the first seemingly concrete examples of the tobacco industry diversifying its portfolio.

[10] FrontLine Security normally publishes four times a year, and has a circulation of about 16,000. This was a special edition of the magazine that was produced in addition to its normal publication schedule. It is published both in hard copy and online. According to the appellants, it is distributed to members of Parliament and Cabinet, provincial legislatures, and industry executives in the fields of national and border security, policing, infrastructure security, IT security, emergency preparedness and tax and trade policy.

[11] The respondents plead that the magazine included multiple defamatory meanings, including that GRE "smuggles illegal tobacco products", "is helping finance terrorists through the sale of contraband tobacco products", "is a criminal organization", "smuggles its brands into Costa Rica", "supplies contraband cigarettes to nearly 1.87 million individuals in Mexico", "does business with Latin American drug cartels" and "foments corruption".

B. Decision of the Motion Judge

[12] The motion by the appellants, to summarily dismiss the action pursuant to s. 137.1 of the Courts of Justice Act was dismissed. In coming to this decision, the motion judge concluded that the vast majority of the issues dealt with in the publication are matters of public interest, particularly the issues surrounding contraband tobacco: Montour et al v. Beacon Publishing Inc. et al, 2017 ONSC 4735, at paras. 16-22. He also found that there was no doubt that the words complained of were published and named the respondents. He indicated that "[t]he words state that the plaintiffs smuggle contraband tobacco and that they are involved with organized crime. Such words are clearly defamatory. I therefore conclude that the claim has substantial merit": Montour, at para. 24. Those findings are not in issue on this appeal.

[13] The motion judge dealt with four defences raised by the appellants: (1) justification, (2) responsible communication, (3) qualified privilege and (4) fair comment. He concluded that none of the defences were made out on the evidence before him. I will now turn to those defences individually and briefly summarize the motion judge's holding on each.

(1) Justification

[14] The motion judge rejected justification because the appellants pleaded only a broad generalization that "these statements were true in substance and in fact as of the date of publication" and because the appellants relied on other publications which had expressed what they say were similar views: Montour, at paras. 27-28. The motion judge cited the "repetition rule" from Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640, at para. 119, which holds "that repeating a libel has the same legal consequences as originating it. This rule reflects the law's concern that one should not be able to freely publish a scurrilous libel simply by purporting to attribute the allegation to someone else."

(2) Responsible Communication

[15] The motion judge rejected the responsible communication defence at paras. 31-32 of his reasons:

[31] Alleging that someone is a smuggler of tobacco and associated with organized crime is clearly a serious allegation of criminal activity. On the record before me the due diligence to verify these allegations was non-existent other than relying on the comments of others. Contraband tobacco as an issue is of public importance but there was no urgency in producing the article that would justify failing to verify the facts as reported. The sources for the comments about the Plaintiffs were other articles that had been published. Those articles were not fact checked in any manner that has been shown in the record before me.

[32] Grant states at para. 116 "in most cases, it is inherently unfair to publish defamatory allegations of fact without giving the target an opportunity to respond." I conclude, based on the record before me, that the Plaintiffs side of the story was not sought. I also conclude that it was not reported in the Defendants article, when referring to another publication El Dario, that it had been reported in that article that the Plaintiffs had denied any involvement in contraband tobacco. Likewise the article of the Defendants did not report the fact that the cultivation of marijuana was legal on tribal lands in California as reported in the Vice News which was used as a source.

(3) Qualified Privilege

[16] The motion judge found that the defence of qualified privilege was not made out on two grounds. First, the motion judge held that the defence was not generally available to publications that are broadly distributed: Montour, at para. 35. Second, the motion judge found that the appellants were under no duty to communicate the information about the respondents in the publication, and certainly under no duty to report uncorroborated allegations of smuggling contraband tobacco by the respondents: Montour, at para. 37.

(4) Fair Comment

[17] The motion judge cited Grant for the principle that the defence of fair comment applies to statements of opinion, but not fact. He found this defence was not made out because the allegations about the respondents were expressed as statements of fact, not opinion: Montour, at para. 38.

C. Errors Alleged

[18] The appellants do not challenge the motion judge's conclusions that the statements about the respondents were defamatory, nor do they challenge his conclusions about responsible communication, qualified privilege or fair comment. However, the appellants submit that the motion judge erred in three respects:

1. He failed to balance the public interest in protecting the expression embodied in the appellants' article about contraband tobacco, against what they submit is minimal harm, if any, suffered by the respondents.

2. He erred in concluding that presumed damages could amount to harm suffered by the respondents, where there was no evidence of financial loss, nor any specific evidence that the reputation of the respondents was diminished on account of the actions of the appellants.

3. He erred in concluding that the defence of justification asserted by the appellants was insufficient to bar continuation of the action.

D. Analysis

(1) Standard of Review

[19] The motion judge did not have the benefit of the six decisions released by this court in August 2018 and his decision does not precisely track the analytical framework established in those authorities: 1704604 Ontario Ltd. v. Pointes Protection Association, 2018 ONCA 685, 142 O.R. (3d) 161; Able Translations Ltd. v. Express International Translations Inc., 2018 ONCA 690, 428 D.L.R. (4th) 568; Armstrong v. Corus Entertainment Inc., 2018 ONCA 689, 143 O.R. (3d) 54; Fortress Real Developments Inc. v. Rabidoux, 2018 ONCA 686, 426 D.L.R. (4th) 1; Platnick v. Bent, 2018 ONCA 687, 426 D.L.R. (4th) 60; Veneruzzo v. Storey, 2018 ONCA 688, 23 C.P.C. (8th) 352.

[20] As explained in Pointes Protection at paras. 96-97, a motion judge's decision is owed deference, absent an identifiable legal error, or palpable and overriding factual error:

[96] The public interest evaluations required under s. 137.1(4)(b) cannot be reduced to an arithmetic-like calculation. It would be misleading to pretend they can be. The assessments are qualitative and, to some extent, subjective. Because the balancing of the competing public interests will often be determinative of the outcome of the s. 137.1 motion, and because the analysis contains an element of subjectivity, it is crucial that motion judges provide full reasons for their s. 137.1(4)(b) evaluations.

[97] If a motion judge provides full reasons, an appeal court must defer to the motion judge's balancing of the competing interests under s. 137.1(4)(b), absent an identifiable legal error, or a palpable and overriding factual error. Deference is important, as there is no reason to think that a simple recalibration of the competing interests by an appeal court will provide a more accurate assessment.

(2) The Balancing of Public Interest in Expression Against the Harm Caused by Publication

[21] Section 137.1(4)(b) of the Courts of Justice Act provides that "a judge shall not dismiss a proceeding under subsection (3) if the responding party satisfies the judge that":

(b) the harm likely to be or have been suffered by the responding party as a result of the moving party's expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression.

[22] As indicated earlier, the motion judge's reasons do not precisely track the analytical framework that was later established in Pointes Protection. However, I rely on his findings in relation to the defences of responsible communication and qualified privilege to the extent they are relevant to this balancing exercise.

[23] While the motion judge found that the subject of contraband tobacco was a matter of general importance, he observed that the statements about the respondents were highly defamatory, uncorroborated allegations published with non-existent due diligence, and that there was no public interest in receiving such allegations: Montour, at paras. 31-33.

[24] On the other hand, at paras. 42-43, he found that the allegations of criminality were so serious, that they would likely damage anyone's reputation and standing in their community, and that the respondents had shown credible and compelling evidence of harm:

[42] The plaintiffs are a leading native Canadian company and its principal Mr. Montour, is a high profile indigenous entrepreneur within the native community. The Publication was targeted at the Plaintiff's suppliers and the content remains on the Internet. The defendants have not apologized or retracted the alleged defamatory statements nor removed the allegations from the internet. The allegations of criminal conduct, and the association with organized crime, are serious allegations which would likely damage anyone's reputation and standing in their community.

[43] I conclude that the Plaintiffs have shown credible and compelling evidence of harm which appears reasonably likely to be proved at trial based on the record before me.

[25] The motion judge repeatedly recognized that there is a public interest in the subject of contraband tobacco. The appellants submit that the article was a serious one, and that the magazine is a "shoestring operation" run out of Ms. MacLean's basement. This litigation will, they say, be ruinous for them in circumstances where they are up against well-funded, experienced litigators. They assert that the libel chill resulting from this action will deter them from publishing future articles of public interest, and that there is no public interest in a trial.

[26] I would not interfere with the motion judge's balancing of the competing interests. He essentially concluded that the defamatory remarks were very serious and that the harm suffered by the respondents outweighed the public interest in protecting the expression of the appellants.

(3) The Absence of Evidence of Financial Loss by the Respondents

[27] The appellants also submit that the motion judge erred in assessing whether the harm suffered by the respondents was serious. The appellants point out that the individual respondent must be treated separately from the respondent corporation. The appellants argue that a corporation cannot suffer from hurt feelings, and rely on Walker et al. v. CFTO Ltd. et al., 59 O.R. (2d) 104 (C.A.), at p. 113:

A company's entitlement to damages in defamation has recently been summed up in Carter-Ruck, Libel and Slander [citation omitted] in the following terms:

… As was made clear by Lord Reid in Lewis v. Daily Telegraph Ltd., 'A company cannot be injured in its feelings, it can only be injured in its pocket. Its reputation can be injured by a libel but that injury must sound in money.' Whilst Lord Reid went on to say 'The injury need not necessarily be confined to loss of income; its goodwill may be injured', a company, which is unable at trial, some two or three years after the original defamatory publication, to point to the slightest hiccup in its trading figures, may be hard pressed to persuade a court that even an unpleasant libel has seriously injured its reputation. Unlike a personal plaintiff, it cannot tug the jury's heart strings by describing its distress and humiliation on reading the defamatory words. [Emphasis added.]

[28] The appellants argue that since the respondent corporation admits that it has suffered no financial losses, the only possible assessment the motion judge could have made about the nature and quantum of the respondent corporation's damages is that there are none. It submits that the respondent corporation has simply relied on bald assertions that the publication may damage its relationship with tobacco farmers, and that it will raise concerns within the Six Nations community. The publication was hand distributed to farmers in the area who supplied tobacco to the respondent corporation.

[29] In Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130, the court indicated at p. 1196: "general damages in defamation cases are presumed from the very publication of the false statement and are awarded at large." The appellants argue that these presumed damages are insufficient evidence of harm for the purposes of the balancing required by s. 137.1(4)(b).

[30] This court dealt with the assessment of harm in this context in Pointes Protection, at paras. 88-91:

[88] The harm suffered or likely to be suffered by the plaintiff as a consequence of the defendant's expression will be measured primarily by the monetary damages suffered or likely to be suffered by the plaintiff as a consequence of the impugned expression. However, harm to the plaintiff can refer to non-monetary harm as well. The preservation of one's good reputation or one's personal privacy have inherent value beyond the monetary value of a claim. Both are tied to an individual's liberty and security interests and can, in the appropriate circumstances, be taken into account in assessing the harm caused to the plaintiff by the defendant's expression: Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130, at paras. 117-21; Blencoe v. British Columbia (Human Rights Commission), 2000 SCC 44, [2000] 2 S.C.R. 307, at paras. 79-80.

[90] On the s. 137.1 motion, the plaintiff must provide a basis upon which the motion judge can make some assessment of the harm done or likely to be done to it by the impugned expression. This will almost inevitably include material providing some quantification of the monetary damages. The plaintiff is not, however, expected to present a fully-developed damages brief. Assuming the plaintiff has cleared the merits hurdle in s. 137.1(4)(a), a common sense reading of the claim, supported by sufficient evidence to draw a causal connection between the challenged expression and damages that are more than nominal will often suffice.

[91] The plaintiff cannot, however, rely on bald assertions in the statement of claim relating to damages, or on unsourced, unexplained damage claims contained in the pleadings or affidavits filed on the s. 137.1 motion. The motion judge must be able to make an informed assessment, at least at a general or "ballpark" level, about the nature and quantum of the damages suffered or likely to be suffered by the plaintiff: see Able Translations Ltd. v. Express International Translations Inc., 2016 ONSC 6785, 410 D.L.R. (4th) 380, at paras. 85-95, aff'd 2018 ONCA 690; Thompson v. Cohodes, 2017 ONSC 2590, at paras. 33-38. [Emphasis added.]

[31] A serious libel does not always manifest itself in financial losses. Recall that in Hill v. Scientology false allegations of criminal contempt against a lawyer resulted in general, aggravated and punitive damages totaling 1.6 million dollars, even without evidence linking any financial loss to the defamatory remarks. It is often difficult for a plaintiff to link reputational harm to financial loss, or to lead testimonial evidence of the actual impact of a particular defamation upon reputation.

[32] In Lachaux v. Independent Print Ltd., [2017] EWCA Civ 1334, [2018] 2 W.L.R. 387, the England and Wales Court of Appeal dealt with a statutory provision intended to limit actions for defamation and create a higher threshold for making out a defamation claim. The statute provided that "a statement is not defamatory unless its publication has caused or is likely to cause serious harm to the reputation of the claimant": Defamation Act 2013 (UK), c. 26, s. 1 (emphasis added).

[33] In Lachaux the court noted the difficulty of proving consequential damages flowing from harm to reputation, at para. 28:

In this context, however, and as is borne out by numerous statements in the authorities, there often may in practice be little in the way of available positive evidence to establish the harm to reputation occasioned: see, for example, the observations of Warby J in paragraph 55 of his judgment in Ames v. Spamhaus Project Limited [2015] EWHC 127 (QB), [2015] 1 WLR 3409 where he said:

"… but as practitioners in this field are well aware, it is generally impractical for a claimant to seek out witnesses to say that they read the words complained of and thought the worse of the claimant".

[34] In Pointes Protection the court made it clear that s. 137.1 was not intended to fundamentally change the law of defamation, as it does not "alter the substantive law as it relates to claims based on expressions on matters of public interest": at para. 46.

[35] Sometimes a false statement may reasonably be supposed to have such a serious impact upon reputation that harm may be presumed, and weighed in the balance for the purposes of s. 137.1(4). Allegations meant to be taken seriously of significant criminal activity might fall within this category.

[36] In Lachaux, the court referred to this possibility at para. 72:

[72] A presumption, whether rebuttable or irrebuttable, arises before and irrespective of consideration of the evidence. An inference arises after and in consequence of consideration of the evidence. Thus at law, in cases of libel (and some cases of slander) there is a presumption of damage: which presumption has in my view, as will be gathered, not of itself been displaced by the 2013 Act. But there is no presumption, at law, of serious damage in a libel case. Accordingly that, under s. 1(1), has to be proved. The point nevertheless remains that serious reputational harm is capable of being proved by a process of inference from the seriousness of the defamatory meaning. [Emphasis in original.]

[37] The Lachaux court concluded at para. 79 that "[w]hether in any given case the [defamatory] imputation is of sufficient gravity as of itself to connote serious reputational harm (quite apart from the question of consequential or special damage)" could be assessed at the screening hearing under the Defamation Act 2013 (UK).

[38] Many of the recommendations of the 2010 Report of the Anti-SLAPP Advisory Panel to the Attorney General were adopted by the legislature: Pointes Protection, at para. 28; Anti-SLAPP Advisory Panel, Report to the Attorney General (Ontario: Ministry of the Attorney General, 2010). That panel recognized at paras. 36-37 of its report that other interests that could conflict with freedom of expression also deserved vindication through the legal process:

[36] The fact that a legal action may have an adverse effect on the ability of persons to participate in discussion on matters of public interest should not be sufficient to prevent the plaintiff's action from proceeding. The protection and promotion of such expression should not be a cover for expression that wrongfully harms reputational, business or personal interests of others.

[37] Conversely, the fact that a plaintiff's claim may have only technical validity should not be sufficient to allow the action to proceed. If an action against expression on a matter of public interest is based on a technically valid cause of action but seeks a remedy for only insignificant harm to reputation, business or personal interests, the action's negative impact on freedom of expression may be clearly disproportionate to any valid purpose the litigation might serve.

[39] This observation is reinforced in Pointes Protection, at para. 88, where this court indicated:

The preservation of one's good reputation or one's personal privacy have inherent value beyond the monetary value of a claim. Both are tied to an individual's liberty and security interests and can, in the appropriate circumstances, be taken into account in assessing the harm caused to the plaintiff by the defendant's expression.

[40] Here, the impugned publication connected the respondents to organized crime, terrorism and tobacco smuggling. The presumed harm resulting from such serious statements may be weighed in the balance for the purposes of s. 137.1(4) even where there is no evidence of pecuniary loss, or direct evidence about damage to reputation. A trier of fact might conclude that one or both of the plaintiffs suffered significant harm, as did the motion judge, even in the absence of direct evidence of pecuniary loss.

[41] For the purposes of the Anti-SLAPP motion, I would not differentiate between the corporate and individual respondents in this case. The individual respondent is so closely identified with the respondent corporation he founded, that a trier could conclude that defamatory statements about the corporation tarnish him to the same degree. In these proceedings, it would serve no purpose at this stage to screen out the action by one plaintiff, but not the other.

[42] The motion judge did not err in considering this presumed damage to reputation flowing from serious allegations of considerable criminality.

(4) Justification

[43] The appellants argue that they met their evidentiary burden by putting the defence of justification "in play". They submit that the onus then fell on the respondents to satisfy the motion judge that there were reasonable grounds to believe that none of the defences advanced were valid. The appellants submit that a trier could conclude that their allegations were true, thereby validating the defence of justification. They point to the fact that the individual respondent admitted an association with marijuana farming operations in California. What the appellants' publication did not mention was that American federal authorities permitted cultivation and sale of medical marijuana on tribal lands, as was reported by Vice News. The implication of the reference in the publication was that the respondents were involved in criminal activity.

[44] The test for evaluating whether there is a valid defence within the meaning of s. 137.1 was outlined in paras. 83-84 of Pointes Protection:

[83] I would add two further observations with respect to the "no valid defence" requirement in s. 137.1(4)(a)(ii). That provision requires the plaintiff to satisfy the motion judge that there are reasonable grounds to believe that the defendant has "no valid defence" to the plaintiff's claim. The section would be unworkable if the plaintiff were required to address all potential defences and demonstrate that none had any validity. I think the section contemplates an evidentiary burden on the defendant to advance any proposed "valid defence" in the pleadings, and/or in the material filed on the s. 137.1 motion. That material should be sufficiently detailed to allow the motion judge to clearly identify the legal and factual components of the defences advanced. Once the defendant has put a defence in play, the persuasive burden moves to the plaintiff to satisfy the motion judge that there are reasonable grounds to believe that none of the defences put in play are valid.

[84] My second observation relates to the word "valid". I would interpret "valid" as meaning successful. The onus rests on the plaintiff to convince the motion judge that, looking at the motion record through the reasonableness lens, a trier could conclude that none of the defences advanced would succeed. If that assessment is among those reasonably available on the record, the plaintiff has met its onus.

[45] Here, the appellants' statements linking the respondents to criminal activity are based on statements attributed to others, which are of unknown value, which do not obviously support the conclusions expressed by the appellants. For example, the translation of the Mexican newspaper article relied upon by the appellants, to connect the respondents to contraband tobacco, is of unknown quality, and the article could be read as suggesting that the respondent corporation was not associated with contraband at the time. The appellants also suggest that a study by a major accounting firm supports the allegation that the respondent corporation smuggled tobacco and was involved with organized crime. This study does not on its face support the allegation that the respondent corporation was smuggling contraband tobacco or was involved in organized crime.

[46] Further, this study was commissioned by another tobacco company, a competitor to the respondent corporation. The study cautions that the accounting firm has not sought to establish the reliability of the information sources by references to other evidence, and that the report was only designed to benefit the company who commissioned the study.

[47] There are many other problems with the other source material relied upon by the appellants which I need not explore in detail.

[48] The respondents assert that they are careful to comply with the many regulations controlling the sale of tobacco products in Ontario and Canada. There is no evidence of any domestic prosecution of the respondents from violation of those regulations.

[49] As was discussed earlier, the appellants' statements that link the respondents to criminal activity rely on problematic source material, much of which is of an unknown value. As such, a reasonable trier could conclude that the appellants did not have a valid defence of justification.

E. Conclusion and Disposition

[50] The respondents have satisfied their onus to show the following:

1. A reasonable trier could conclude that the action has substantial merit;

2. A reasonable trier could conclude that there are no viable defences;

3. The harm suffered by the respondents as a result of the appellants' expression is sufficiently serious that the public interest in permitting the action to proceed outweighs the public interest in protecting that expression.

[51] Accordingly, I would dismiss the appeal with costs to the respondents in the agreed sum of $20,000, inclusive of HST and disbursements. In the event any issues remain regarding costs awarded by the motion judge, the parties may make brief written submissions in that respect, due from the appellants within 30 days after the date of release of these reasons, and from the respondents within 15 days thereafter.

"G. Pardu J.A."

"I agree Doherty J.A."

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

Released: March 29, 2019

"DD"