COURT OF APPEAL FOR ONTARIO DATE: 20210118 DOCKET: C67852
Brown, Zarnett and Thorburn JJ.A.
BETWEEN
Subway Franchise Systems of Canada, Inc., Subway IP Inc., and Doctors Associates Inc. Plaintiffs (Appellants)
and
Canadian Broadcasting Corporation, Charlsie Agro, Kathleen Coughlin, Eric Szeto and Trent University Defendants (Respondents)
Counsel: William C. McDowell, Sana Halwani, Paul-Erik Veel and Brendan F. Morrison, for the appellants Christine Lonsdale, Gillian Kerr and William Main, for the respondents Canadian Broadcasting Corporation, Charlie Agro, Kathleen Coughlin and Eric Szeto
Heard: June 25, 2020 by video conference
On appeal from the order of Justice Edward M. Morgan of the Superior Court of Justice, dated November 22, 2019, with reasons reported at 2019 ONSC 6758.
Thorburn J.A.:
A. OVERVIEW
[1] This is the appeal of an order dismissing the appellant Subway Franchise Systems of Canada, Subway IP Inc., and Doctors Associates Inc. (“Subway”)’s action for defamation against the Canadian Broadcasting Corporation and certain named employees (“CBC”), pursuant to s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”).
[2] In a CBC Marketplace television program, online media report, and Twitter posts to the public, CBC represented that only approximately 50% of the DNA in Subway chicken was chicken DNA. The report was based on test samples conducted by Trent University’s Natural Resources DNA Profiling & Forensic Centre (“Trent”).
[3] The appellant Subway brought a $210 million action against the CBC and Trent for defamation, and a claim against Trent only, for negligence. Subway sought damages against CBC for loss of reputation, loss of sales, and damage to the value of Subway’s trademarks.
[4] CBC and Trent each brought a motion pursuant to s. 137.1 of the CJA. CBC sought to dismiss Subway’s entire action against it, while Trent sought to dismiss the claim against it for negligence. The motion judge dismissed the action against the CBC but allowed the negligence claim (which was the only subject of Trent’s motion) to continue. He ordered Subway to pay full indemnity costs to the CBC, and Trent to pay partial indemnity costs to Subway.
[5] Both Subway and Trent have appealed. These reasons only address Subway’s appeal of the dismissal of the action against CBC. The Trent appeal is addressed in a separate decision of this court.
[6] CBC took the position that the lawsuit against it was aimed, not at vindicating Subway’s reputation or recovering losses, but rather, at shutting down discussion about issues of public interest. CBC claimed that Subway’s action amounted to a Strategic Litigation Against Public Participation (“SLAPP”) suit.
[7] Subway claims the motion judge erred in dismissing Subway’s defamation claim against the CBC. The motion judge held that the subject matter involves issues of public interest and the claim has substantial merit.
[8] Subway claims the motion judge erred in holding that,
(a) Subway did not establish that there are grounds to believe CBC has no valid defence in the proceeding, and
(b) The public interest favours dismissal of Subway’s action against the CBC and its employees.
[9] In particular, Subway claims the motion judge:
a. Delved unduly into the merits of the claim;
b. Failed to consider and or misapprehended relevant facts relating to the defence of responsible communication;
c. Wrongly held that deference to CBC’s editorial decisions should cloak the entire decision;
d. Failed to consider whether Subway’s action was a SLAPP suit; and
e. Minimized the extent of Subway’s damages by viewing them in the context of Subway’s business as a whole.
[10] Subway also claims the motion judge erred in ordering Subway to pay costs of the motion to the CBC in the amount of $764,724.50.
[11] After this appeal was heard, the Supreme Court of Canada released its companion decisions on the interpretation of s. 137.1 of the CJA in 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22 (“Pointes”) and Bent v. Platnick, 2020 SCC 23 (“Bent”). Counsel were permitted to file supplementary facta to address the effect of these decisions on this case. Both parties agreed that this court’s approach in Pointes was largely affirmed by those decisions with minor modifications as set out herein.
[12] For the reasons that follow, I would allow the appeal.
B. BACKGROUND EVIDENCE
(1) CBC’s investigation
[13] In July 2016, CBC contacted Trent to see if Trent could determine the percentage of chicken in a cooked chicken product. Trent confirmed that it could. Trent was retained by the CBC and Matt Harnden conducted Trent’s testing.
[14] The Trent laboratory is not certified by the International Organization for Standardization (“ISO”). (The ISO certification demonstrates that a laboratory is compliant with international standards for quality assurance.) Nor had Trent done this type of testing before.
[15] The CBC also retained Dr. Robert Hanner, an Associate Professor in the Department of Integrative Biology at the University of Guelph, to comment on Trent’s reports.
(2) Requests for Response from Subway Prior to Airing the Program
[16] CBC was in touch with Subway’s public relations firm to advise that it was conducting testing. On February 1, 2017, after six months of testing, the CBC wrote to advise that they had “preliminary” results in respect of the DNA testing, to the effect that Subway’s chicken products were 50% soy, and requested Subway’s response by February 2, 2017.
[17] On February 15, 2017, the CBC again wrote to Subway advising that they would be broadcasting “next week”, and sought a response by February 17, 2017.
[18] On February 16, 2017, Subway asked for more information on the test results and the CBC provided Subway with a copy of the tests.
[19] On February 17, 2017, the CBC requested a response by February 20 at noon. On February 20, 2017, Subway provided the CBC with the following statement:
SUBWAY Canada cannot confirm the veracity of the results of the lab testing you had conducted.
However, we are concerned by the alleged findings you cite with respect to the proportion of soy content. Our chicken strips and oven roasted chicken contain 1% or less of soy protein. We use this ingredient in these products as a means to help stabilize the texture and moisture. All of our chicken items are made from 100% white meat chicken which is marinated, oven roasted and grilled.
Finally, all of our chicken items (and every item on our menu, for that matter) are inspected by the Canadian Food Inspection Agency, and all of our offerings meet or exceed CFIA standards. The same holds true for all Canadian and U.S. labelling requirements.
[20] The CBC provided additional information to Subway on February 21, 2017. Subway responded with the following statement:
Again we disagree with your test results. Our recipe calls for 1% or less of Soy protein in our chicken products. We tested our chicken products recently for nutritional and quality attributes and found it met our food quality standards. We will look into this again with our supplier to ensure that the chicken is meeting the high standard we set for all of our menu items and ingredients.
[21] Subway refused to participate in an on camera interview.
(3) Concerns Expressed by Dr. Hanner Before Marketplace was Aired
[22] On February 9, 2017, Dr. Hanner expressed concern about the test results: “You need to be aware these results could easily be over-stated as the methods (as reported) do not stand up to scrutiny because they lack detail and appear to contain conflicting details”. (In an earlier telephone conversation with the CBC, Dr. Hanner had stated that “DNA alone is probably not the answer”.)
[23] However, on February 11, 2017, Dr. Hanner sent a follow up email to the CBC to say that “I am happy with the follow up report and am pleased that they acknowledge that they are reporting DNA ratios and that they cannot be taken as exact mass ratios in the product – but are indeed good indicators that Subway had much more soy in their product than the others….”
(4) The Alleged Defamatory Remarks
[24] The Marketplace program was televised on February 24, 2017, the online article reporting on the broadcast was published the same date, and a number of tweets were published on or about the same time.
[25] The Marketplace television episode was promoted as the “Chicken Challenge”. The program compared the chicken content in chicken products sold by Subway with those of its competitors.
[26] The following discussion between Charlsie Agro, a member of the Marketplace team, and Harnden, took place during the program:
Agro: Will a DNA test tell us how much chicken is actually in the chicken?
Harnden: It will give you a rough estimate of a ratio between chicken and plant, if there’s plant.
Agro: DNA tests won't give us an exact percentage of the amount of chicken in the whole piece of chicken, but Matt says it's a good indicator. This idea if you're not getting 100% chicken DNA, does that mean that you're not getting 100% actual chicken meat?
Harnden: Yeah, exactly so there would be legitimate chicken in there, but mixed with some plant filler.
[27] In a taste test segment where guests sampled fast food chicken products Harnden stated that:
Our DNA test shows that it could be less than 50% chicken … And Sample C? Well our DNA test shows it’s only slightly more than 50% chicken. And who makes both C and D? Subway.
[28] In an interview between Agro and Ben Boher, a food scientist, Agro stated that:
Agro: [O]ur DNA test shows Subway’s strips and oven roasted chicken could be only about 50% chicken. And guess what? The rest, mostly soy.
[29] The program was accompanied by an article published by CBC on its website called “What’s in your chicken sandwich? DNA tests show Subway sandwiches could contain just 50% chicken”. The article reads in part as follows:
DNA tests show Subway sandwiches could contain just 50% chicken. […]
A DNA analysis of the poultry in several popular grilled chicken sandwiches and wraps found at least one fast food restaurant isn’t serving up nearly as much of the key ingredient as people may think. […]
Looks like chicken. Tastes like chicken. But is it really all chicken?
[30] Further comments were made in “Tweets” such as the following:
Get ready east coast‼ How much chicken is actually in your fast food grilled chicken?? @cbcmarketplace will tell you next ‼! […]
Any guesses what else could be in your chicken??[…]
If you ordered a chicken sandwich at Subway, it might only be about half chicken. […]
More from @cbcmarketplace investigation: DNA test shows Subway sandwiches could contain just 50% chicken. […]
Order chicken instead of red meat? You might be getting less real chicken than you think at fast food restaurants. […]
Is your chicken actually chicken?
(5) Resulting Actions Taken by the Parties
[31] On March 1 after the Marketplace program had aired, Dr. Hanner advised the CBC that,
I do want to come back to this issue of processing. If, for some reason, their chicken has experienced heavy processing that degrades DNA while the soy has not, it will make the soy seem over-represented. Unless manufacturers are willing to allow us to test ingredients at different points along the production process to determine whether and to what extent, that DNA may be degraded, it becomes challenging to extrapolate DNA ratios to ingredient mass ratios. So, to comfortably say their claim of 1% or less soy is ‘unreasonable’ without knowledge of the manufacturing process might be overstepping what we can say from the data.
[32] That same day, the CBC posted an online, post-publication follow-up story entitled, “Subway defends its chicken”. The story included Subway’s own test results. The article concedes that DNA testing is “nuanced” and does not reveal percentages, and explains that Subway’s own laboratory tests showed a 1% soy content in the chicken products.
[33] Subway claims there were approximately three billion impressions of the CBC Marketplace story, as the story was widely reported or referenced throughout Canada, the US, and internationally.
[34] Certain Subway internal communications indicated that Subway at one time considered that the Marketplace Report had only had a small impact on sales. However, Subway’s expert provided a preliminary opinion that Subway had suffered significant financial losses. There was also evidence that Subway had spent over $500,000 in professional fees in responding to the Marketplace Report.
[35] Subway issued a Fresh as Amended Statement of Claim (“Claim”) against the CBC and Trent on January 4, 2018. In the Claim, Subway sought damages against the CBC and its employees for defamation in the amount of $210 million.
[36] On September 24, 2019, the CBC brought a motion to dismiss the claim for defamation against the CBC and its named employees, pursuant to section 137.1(3) of the CJA.
C. THE TEST ON A S. 137.1 MOTION
(1) The Objective of the Legislation
[37] Section 137.1 of the CJA addresses the concern that participation in matters of public interest may be hampered by the fear of legal reprisals.
[38] The stated objective as articulated by then Attorney General of Ontario Meilleur, was to “quickly identify and deal with strategic lawsuits, minimizing the emotional and financial strain on defendants …and strike a balance that will help ensure abusive litigation is stopped but legitimate action can continue”. (Legislative Assembly of Ontario (2014) at p. 1971.)
[39] Consistent with these objectives, the motion judge need only conduct a preliminary assessment of the merits: *Pointes*, at para. 37.
(2) The Wording of the Provision
[40] The provision reads as follows:
137.1 (1) The purposes of this section and sections 137.2 to 137.5 are,
(a) to encourage individuals to express themselves on matters of public interest;
(b) to promote broad participation in debates on matters of public interest;
(c) to discourage the use of litigation as a means of unduly limiting expression on matters of public interest; and
(d) to reduce the risk that participation by the public in debates on matters of public interest will be hampered by fear of legal action.
[41] “Expression” is defined to include any communication.
[42] At the first stage, the defendant must demonstrate that the litigation arises out of an expression that relates to a matter of public interest. Section 137.1 of the CJA provides that,
(3) … a judge shall, subject to subsection (4), dismiss the proceeding against the person if the person satisfies the judge that the proceeding arises from an expression made by the person that relates to a matter of public interest.
[43] If the expression is found to relate to a matter of public interest, the onus shifts to the plaintiff:
(4) A judge shall not dismiss a proceeding under subsection (3) if the responding party [plaintiff] satisfies the judge that,
(a) there are grounds to believe that,
(i) the proceeding has substantial merit, and
(ii) the moving party has no valid defence in the proceeding; and
(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.
D. ISSUES THAT ARE NOT CONTESTED ON THIS APPEAL
(1) Communications Involving Matters of Public Interest
[44] The motion judge acknowledged that the expression relates to a matter of public interest. He held that,
It is not particularly controversial to say that the public has an interest in knowing the ingredients, and percentage quantities thereof, of the foods they commonly ingest. Courts have had little hesitation in concluding that consumer advisory and protection issues regarding businesses catering to the public are within the “public interest”: Level One Construction Ltd. v. Burnham, 2018 BCSC 1354, para. 179.
[45] He then correctly noted that once the “public interest” threshold is crossed, the onus shifts to the responding party (in this case, Subway) to establish that the proceeding should not be dismissed.
(2) Claim of Substantial Merit
[46] The motion judge accepted that Subway’s claim has substantial merit. He held that:
[T]here is considerable evidence that suggests the false and harmful nature of the information conveyed to the public in the Marketplace Report. …[T]hese alleged falsities went directly to Subway’s business reputation as a purveyor of food. In supporting its claim, Subway has done a significant amount of work in obtaining expert evidence, in having the chicken products in question tested and re-tested by independent laboratories, and in demonstrating the wide circulation of the CBC’s broadcast and publication.
[47] The findings that,
(a) The CBC established that the communications are expressions on matters of public interest, and
(b) The proceeding has substantial merit,
are not challenged on this appeal.
E. THE ISSUES TO BE DETERMINED ON THIS APPEAL
[48] The issues to be determined on this appeal are whether the motion judge erred in deciding that Subway has not satisfied its onus to establish that:
(a) There are grounds to believe CBC has no valid defence; and
(b) The public interest in protecting the expression outweighs Subway’s likely harm.
[49] Subway also claims CBC should not have been awarded costs of the proceeding in the amount of $764,724.50.
F. ANALYSIS OF THE MOTION JUDGE’S DECISION AND CONCLUSION
(1) The First Issue: S. 137.1(4)(a): Whether Subway established that there are Grounds to Believe CBC has no Valid Defence
[50] Subway claims the motion judge erred in law by:
(a) Applying the wrong test in deciding whether there were grounds to believe CBC has no valid defence; and
(b) Assessing the claim as though he were the ultimate trier of fact, not a motion judge making a preliminary assessment.
(a) The Threshold to be Applied to Establish Grounds to Believe No Defence
[51] Pointes and Bent, the two seminal decisions on the subject of s. 137.1 of the CJA, had not yet been released when the motion judge delivered his reasons. Those cases clarify the threshold to be met by a plaintiff in respect of s. 137.1(4)(a).
[52] Findings of “‘substantial merit’ and ‘no valid defence’ should be seen as constituent parts of an overall assessment of the prospect of success of the underlying claim”: *Pointes*, at para. 59.
[53] The plaintiff is only “required to show that there is a basis in the record and the law — taking into account the stage of the proceeding — to support a finding that the defences … do not tend to weigh more in [the defendant’s] favour.” (emphasis in original): *Bent*, at para. 103.
(b) What Constitutes “Grounds to Believe”
[54] “Grounds to believe” means “something more than mere suspicion, but less than ... proof on the balance of probabilities”: Mugesera v. Canada (Minister of Citizenship and Immigration), 2005 SCC 40, [2005] 2 S.C.R. 100, at para. 114; cited with approval in *Pointes* at para. 40.
[55] Given the early stage of the proceeding, that damage assessment can be an ongoing process, and that such motions are meant to weed out clearly defective claims, there is only a limited assessment of the evidence from the motion judge’s perspective: *Pointes*, para. 39. If the motion record raises serious credibility issues or inferences to be drawn from competing primary facts, the motion judge must avoid taking a “deep dive” into the ultimate merits and instead, engage in a much more limited analysis: *1704604 Ontario Ltd. v. Pointes Protection Association, 2019 ONCA 100*, at para. 78.
[56] “A determination that a defence ‘could go either way’ in the sense that a reasonable trier could accept it or reject it, is a finding that a reasonable trier could reject the defence.”: Bondfield Construction Company Limited v. The Globe and Mail Inc., 2019 ONCA 166, at para. 15.
[57] As Cavanagh J. so aptly put it: “Where a trier could reasonably conclude that the defendants did not conduct a sufficiently diligent investigation… a trier could reasonably conclude that the defence of responsible communication would not succeed”: Hamlin v. Kavanagh, 2019 ONSC 5552, at para. 45.
(c) The Defence of Responsible Communication
[58] The defence of responsible communication will apply where the publication is on a matter of public interest, and the publisher diligently tried to verify the allegation taking into account:
(a) the seriousness of the allegation;
(b) the public importance of the matter;
(c) the urgency of the matter;
(d) the status and reliability of the source;
(e) whether the plaintiff's side of the story was sought and accurately reported;
(f) whether the inclusion of the defamatory statement was justifiable;
(g) whether the defamatory statement’s public interest lay in the fact that it was made rather than its truth (“reportage”); and
(h) any other relevant circumstances.
Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640, at para. 126.
[59] Responsible efforts must be made to take reasonably diligent steps to validate the accuracy of the statements made: Casses v. Canadian Broadcasting Corporation, 2015 BCSC 215, at paras. 498-530 and *Grant*, at para. 122.
(d) The Motion Judge’s Analysis of the First Issue
[60] The motion judge acknowledged that if Subway is able to establish that a trier of fact could reject the CBC’s defence of responsible communication, the case should not be dismissed: at para. 66.
[61] He also acknowledged that his role was only to conduct a “limited merits analysis” to determine whether Subway had demonstrated on a balance of probabilities that there are reasonable grounds to believe CBC has “no valid defence” of responsible communication: at para. 70.
[62] The motion judge held that Subway did not satisfy its onus to show there were grounds to believe CBC’s defence of responsible communication would succeed because:
(a) CBC chose Trent, an independent university laboratory;
(b) Trent ran multiple tests on the Subway products all of which found that Subway’s chicken had substantially more plant DNA than the others;
(c) CBC retained an outside expert in DNA testing who confirmed that Trent’s laboratory methodology and results were credible;
(d) CBC provided the results to Subway and asked them to respond. Subway had ample time to respond to the CBC before the program was aired;
(e) Subway’s only response was that its chicken was supplied by a third-party source and all chicken items are inspected by the Canadian Food Inspection Agency, and meet or exceed their standards;
(f) A paraphrased version of Subway’s response was included in the Marketplace Report;
(g) Subway declined to supply its own test data to the CBC;
(h) Subway refused to appear in the CBC broadcast on February 24, 2017; and
(i) After the program was aired, on March 1, 2017, the CBC posted an online, post-publication follow-up story entitled, “Subway defends its chicken”. The story included Subway’s own test results. The article concedes that DNA testing is “nuanced” and does not reveal percentages, and explains that Subway’s own laboratory tests showed a 1% soy content in the chicken products.
[63] The motion judge therefore concluded that,
The CBC … made significant efforts to inquire into the veracity of the tests they were reporting. On the state of the record, I find it hard to conceive of a reasonable jury finding that CBC has no valid defense of responsible communication.
(e) Analysis and Conclusion of the First Issue: Whether there are Grounds to believe CBC has no valid defence
[64] It is agreed that the claim has substantial merit. Moreover, CBC concedes that a high degree of diligence was required, given the severity of the allegations and their likely impact on Subway: Reasons of the motion judge, para. 56.
[65] The motion judge held that the CBC exercised due diligence before publishing the findings and that Subway did not establish grounds to believe the CBC has no valid defence of responsible communication.
[66] In so finding, the motion judge erred in law by applying a standard that was higher than the standard articulated by the Supreme Court in its recent decisions.
[67] In *Bent* at para. 103, the Supreme Court held that a plaintiff need only demonstrate “that there is a basis in the record and the law — taking into account the stage of the proceeding — to support a finding that the defences [the defendant] put in play do not tend to weigh more in [the defendant’s] favour.” (emphasis in original).
[68] Subway demonstrated there is a basis in the record to support a finding that the defence of responsible communication at this stage, does not tend to weigh more in CBC’s favour. That evidence includes the following:
a) CBC knew that accreditation of a laboratory by the ISO is important, but declined to have an ISO-accredited laboratory conduct the testing. The ISO certification confirms that a procedure has all the requirements for standardization and quality assurance;
b) CBC knew Trent was not an ISO certified laboratory and that it had not done this type of testing before;
c) Dr. Robert Hanner, an expert retained by CBC, expressed concerns both before Trent started doing the testing and after Trent delivered its preliminary analysis about whether Trent could determine the percentage of chicken in a sample;
d) Subway disputed the results;
e) CBC did not initially report Subway’s statement that “[o]ur chicken strips and oven roasted chicken contain 1% or less of soy protein … to help stabilize the texture and moisture” in its broadcast. That information was only communicated in an article published by the CBC one week after the program was aired, on March 1;
f) CBC spoke to a confidential source from Grand River (Subway’s supplier) regarding the composition of the chicken products. That source did not corroborate the results of the Trent tests; and
g) There was no need to urgently disseminate the information to the public and the CBC could have delayed the broadcast until the information could be verified.
[69] The motion judge himself outlined some of these factors as “red flags” that are “potentially quite significant”.
[70] Later in the legal proceeding, Dr. Rainer Schubbert, Subway’s expert on DNA methods and food testing, testified that there were serious flaws in the tests leading to inaccurate results.
[71] Questions were raised about the reliability of the findings and the results. The CBC concedes that a high degree of due diligence was required given the seriousness of the allegations. There was no urgency to the dissemination of the information. Had more due diligence been conducted before its dissemination, the information could have been verified.
[72] There is therefore a basis in the record to support a finding that the defence of responsible communication does not tend to weigh more in CBC’s favour at this stage of the proceeding.
[73] For these reasons, I find the motion judge erred in law by applying a standard higher than the standard articulated in the recent Supreme Court cases in Pointes and Bent.
[74] Because Subway met the threshold in s. 137.1(4)(a) articulated in Pointes and Bent, the second issue must therefore be addressed as, in order to allow the action to proceed, Subway must also succeed on the second issue.
(2) The Second Issue: Whether the Harm Likely Suffered by the Responding Party is Sufficiently Serious that the Public Interest in Allowing the Proceeding to Continue Outweighs the Public Interest in Protecting that Expression
[75] To satisfy the public interest factor at s. 137.1(4)(b) of the CJA, Subway must establish that “the harm likely to be or have been suffered by [Subway] as a result of the [CBC’s] expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression.”
(a) The Positions of the Parties
[76] Subway claims the motion judge,
(a) Did not appreciate the substantial harm suffered by Subway;
(b) Improperly weighed the extent of Subway’s damages, by assessing the damages as though he were the trial judge;
(c) Considered the scope of Subway’s losses not in terms of the estimates of damages but only in the context of Subway’s overall business; and
(d) Failed to consider that this case does not bear the four hallmarks of a SLAPP suit including evidence of a history of attempts to silence critics, financial power imbalance, a punitive purpose, and minimal damages suffered: Platnick v. Bent, 2018 ONCA 687, 426 D.L.R. (4th) 60, aff’d 2020 SCC 23, at para. 98.
[77] Subway contends it suffered significant loss of reputation, lost sales and legal fees and its objective was simply to seek redress for those losses resulting from allegedly false reporting. Subway submits it has no history of using litigation to silence its critics, and there is no significant financial or power imbalance between Subway and the CBC.
[78] The CBC questions the extent of the harm suffered, notes Subway’s extensive resources, and contends that Subway “brought its substantial financial clout to bear on pursuing a damage claim that is out of all proportion to its realistic losses, with the aim of silencing its critics such as CBC”: motion judge’s Reasons, at para. 91.
[79] CBC takes the position that, “The disconnect between the amount claimed and Subway’s internal assessment constitutes another hallmark of a SLAPP.”
(b) The Objectives of s. 137.1(4)(b): Weighing the Public Interest
[80] Section 137.1(4)(b) is the core of the s. 137.1 analysis. The stated objective is to quickly identify and deal with strategic lawsuits, and ensure abusive litigation is stopped but legitimate action can continue: *Pointes*, at paras. 61-62.
[81] Summary procedures such as this, are intended to avoid the need for a trial where it is clearly unnecessary to achieve a fair result. They are not meant to duplicate a trial at the outset of the proceeding.
[82] They allow motion judges to “assess how allowing individuals or organizations to vindicate their rights through a lawsuit — a fundamental value in its own right in a democracy — affects, in turn, freedom of expression and its corresponding influence on public discourse and participation in a pluralistic democracy”: *Pointes*, at para. 81 and *Bent*, at para. 139.
(c) Assessing the Harm Suffered
[83] In assessing the harm likely to be suffered by a plaintiff, both monetary and non-monetary harm are relevant: *Pointes*, at para. 69.
[84] The court in Pointes cited with approval the words of then Attorney General of Ontario, Madeleine Meilleur, in discussions preceding the enactment of the legislation that “reputation is one of the most valuable assets a person or a business can possess” (Legislative Assembly of Ontario (2014), at p. 1971).
[85] Neither reputational harm nor monetary harm is more important than the other. Nor is harm synonymous with the damages alleged. The text of the provision does not depend on a particular kind of harm, but expressly refers only to harm in general: *Pointes*, at paras. 11-13.
[86] A plaintiff must simply “provide evidence for the motion judge to draw an inference of likelihood in respect of the existence of the harm and the relevant causal link”: *Pointes*, at para. 71.
(d) Assessing the Public Interest
[87] In weighing the public interest in allowing a proceeding to continue, certain factors may be relevant, including a history of attempts to silence critics, financial power imbalance, punitive purpose, and minimal damages suffered. The potential chilling effect on future expression and the defendant’s history of advocacy in the public interest may also be relevant: *Pointes*, at paras. 79 and 80.
(e) The Motion Judge’s Decision
[88] The motions judge noted that, “CBC’s estimate of the audience for the CBC’s Marketplace Report is in the range of 858,000 viewers.” The CBC story was also reported in publications such as USA Today, New York Post, Breitbart News, and Perez Hilton.
[89] Afterwards, the chicken content of Subway’s sandwiches became a frequent pop culture reference, apparently complete with a joke about the issue on the popular American television show, Saturday Night Live.
[90] Subway’s expert estimated financial losses due to lost sales in the United States to be in the range of $52.3 million, in Canada in the range of $1.5 million, and Subway claims legal costs of dealing with the fallout are in the range of $500,000.
[91] The motion judge accepted that the controversy became well known.
[92] The motion judge noted however that CBC’s scepticism that a Canadian broadcast and publication would have such an impact in the United States, was bolstered by transcripts of conference calls between Subway and its franchisees. CBC claims they disclose that Subway concluded the broadcast and online publication had some small impact on sales in Canada, but that bad weather was the primary factor affecting Canadian sales post-Marketplace Report. In the United States, a much bigger market, it did not appear to the Subway representatives on that calls that the Marketplace Report had any noticeable impact on sales.
[93] Moreover, he held that “I cannot dismiss the [CBC]’s explanation out of hand” that “Subway is using litigation as an intimidation tactic to chill any further consumer reports or investigations...”: at para. 94. The motion judge concluded at paras. 95 and 98, that in assessing the public interest in protecting the expression, the interest,
[T]ouches on food product ingredients and truth in labelling food products, which is a consumer protection issue of the highest order. … Under the circumstances, I find that these public purposes are fulfilled by dismissing the action as against CBC. They outweigh any potential impact that this may have on the private interest of Subway.
(f) Analysis of the Motion Judge’s Assessment of the Public Interest
[94] A motion judge’s determination on this branch is entitled to deference.
[95] With this in mind, the question is whether the motions judge erred in law in the manner in which he considered the harm Subway likely suffered, and in his approach to weighing the public interest. I find that he did.
[96] The motion judge failed to appreciate Subway’s:
(a) reputational harm;
(b) the likelihood of serious financial harm; and
(c) that this proceeding does not bear the indicia of a SLAPP suit.
[97] The broad dissemination of defamatory statements that Subway’s chicken products are only half chicken in both Canada and the United States, assuming those statements are false, is evidence from which one can infer that Subway likely suffered significant reputational harm.
[98] Moreover, while some Subway representatives may have told franchisees that Subway’s financial losses were smaller than the losses subsequently calculated by Subway’s expert, the disconnect between that evidence was not a matter to be determined on this type of motion. It was sufficient that there was some expert evidence that supported an inference that Subway may have suffered serious financial losses.
[99] At this early stage of this proceeding, there is evidence of significant reputational and financial harm. As Doherty J.A. said in this court’s decision in *Pointes* at para. 78, “If the motion record raises serious questions about the credibility of affiants and the inferences to be drawn from competing primary facts, the motion judge must avoid taking a ‘deep dive’ into the ultimate merits of the claim under the guise of the much more limited merits analysis required by s. 137.1(4)(a).”
[100] The inference of a likelihood of significant harm should not be discounted by the fact that Subway is a large enterprise absent evidence that the proceeding was commenced for an ulterior and improper purpose.
[101] The fact that the alleged losses at this stage while substantial, are considerably less than pleaded, does not mean they are not substantial. In any event, the expert assessment of damages to date may not represent all losses as of the date of trial and the amount pleaded represents the maximum allowable amount that could be awarded by the ultimate trier of fact.
[102] Although the motion judge held he could not “dismiss out of hand” the possibility that this was a SLAPP suit, the decisions of the Supreme Court in Bent and Pointes hold that the s. 137.1(4)(b) stage involves a public interest weighing exercise and not simply an inquiry into the hallmarks of a SLAPP: *Pointes*, at paras. 79-81; *Bent*, at para. 171. Whether a party is attempting to vindictively or strategically silence another party or is attempting to legitimately recover for harm arising from a defamatory statement may form part of the public interest weighing inquiry: *Bent*, at para. 171. Here, there is no evidence of ulterior motive, abuse of power or other improper purpose.
[103] Allowing this action to proceed to a determination on the merits gives appropriate weight to the public interest in seeing harm arising from defamatory statements remedied and the public interest in protecting the type of expression in which CBC engaged. At the heart of the action is CBC’s ability to rely on the defence of responsible communication. The continuation of the action should not deter others from expression, but should deter others from making remarks without first taking reasonable steps to substantiate the veracity of those remarks particularly where, as in this case, there is no urgency to the dissemination of that information: *Bent*, at para. 167.
[104] For these reasons, I find the motion judge erred in law by engaging in an assessment of damages as though he were the trial judge, in failing to appreciate that damage assessment may be an ongoing process, and in failing to appropriately weigh the public interest.
[105] At this stage of the proceeding, the public interest in allowing the action to be determined on the merits outweighs the public interest in protecting this expression from being adjudicated.
(3) The Third Issue: Appeal of the Cost Award
[106] Subway submits that, in the event that the judgement is not set aside, leave should be granted to appeal the Costs Award. Subway claims the award was excessive and did not take into account the fact that the motion judge found the claim had substantial merit. Subway claims the appropriate award should have been $250,000.
[107] Leave to appeal is unnecessary as Subway was successful on this appeal, with the result that CBC’s motion to dismiss the action against it is dismissed. Accordingly, the motion judge’s costs order in favour of CBC must also be set aside.
[108] Section 137.1(8) provides that the presumptive rule is that a failed motion to dismiss attracts no costs order, unless the judge considers such an order to be appropriate. As the action will now proceed, it is not appropriate to order costs of the motion below.
G. CONCLUSION
[109] For the above reasons, I would allow the appeal and allow the action to continue as against the CBC and its named employees.
[110] Subway is entitled to partial indemnity costs of this appeal. If the parties are unable to agree on the quantum of costs of this appeal, they are to make brief written submissions of no more than three pages, also within ten days of the release of this decision.
Released: January 18, 2021 (“D.B.”)
“J.A. Thorburn J.A.”
“I agree. David Brown J.A.”
“I agree. B. Zarnett J.A.”
