COURT OF APPEAL FOR ONTARIO DATE: 20210511 DOCKET: C68144

Lauwers, Miller and Nordheimer JJ.A.

BETWEEN

Geoff Grist, Pauline Grist and Brook Restoration Ltd. Plaintiffs (Appellants)

and

TruGrp Inc., Alexander McMullen and Christian Brannan Defendants (Respondents)

Counsel: Derek J. Bell and Katelyn Ellins, for the appellants Damien Buntsma and Richard K. MacGregor, for the respondents

Heard: December 1, 2020 by video conference

On appeal from the judgment of Justice Grant R. Dow of the Superior Court of Justice, dated February 5, 2020, with reasons at 2020 ONSC 347.

REASONS FOR DECISION

Overview

[1] The respondents Alexander McMullen and Christian Brannan were employees of the appellant Brook Restoration Ltd. (“Brook”), a building restoration company. McMullen and Brannan left Brook to start a competing business, the respondent TruGrp Inc. (“TruGrp”).

[2] Litigation followed. In March 2018, Brook sued McMullen and Brannan for various causes of action, including breach of fiduciary duty, misappropriation of confidential information, and interference with economic relations, later amending their claim to include TruGrp as a defendant (the “Brook action”). In March 2019, the respondents sued Brook, Brook’s officers Geoff Grist and Pauline Grist, and Brook’s counsel for defamation, among other causes of action (the “TruGrp action”). The TruGrp action was discontinued.

[3] In July 2019, the appellants brought the present action alleging, among other claims, defamation. The respondents responded with a motion under s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C.43, to dismiss it as a Strategic Lawsuit Against Public Participation (“SLAPP”).

[4] The motion judge allowed the motion and dismissed the appellants’ action. For the reason given below, we do not agree that the July 2019 action is properly characterized as a SLAPP. Accordingly, for the reasons given below, the appeal is allowed and the order dismissing the action is set aside.

Background

A. The TruGrp Action

[5] Under the Brook action, the appellants’ counsel sent preservation letters to TruGrp’s contractors directing them to preserve any relevant evidence. In March 2019, in response to the preservation letters, the respondents sued the appellants and their counsel for defamation, civil conspiracy, and unlawful interference with economic relations. The next month, the respondents discontinued the TruGrp action.

B. The OLRB Application

[6] In May 2019, The Operative Plasterers’ and Cement Masons’ International Association of the United States and Canada, Local 598 (the “Union”) initiated an Ontario Labour Relations Board (the “OLRB”) application against Brook and TruGrp. The OLRB application was unrelated to the Brook and TruGrp actions. It was centred on whether TruGrp was Brook’s “successor employer” under the Labour Relations Act, 1995, S.O. 1995, c. 1, Sched. A, and therefore bound to the same collective agreements as Brook. Geoff Grist, Pauline Grist, and the appellants’ counsel in the Brook Action were not parties in the OLRB proceeding.

[7] When TruGrp filed its response to the Union’s Application, it attached the statement of claim from the discontinued TruGrp Action. Brook alleged that the response and attached statement of claim contained false and defamatory statements about Brook, Geoff Grist, Pauline Grist, and the appellants’ counsel. TruGrp argued the statement of claim was relevant to establishing that TruGrp was not a successor employer. The statements to which the appellants objected include the following allegations:

• the appellants and their counsel sent the preservation letters to intimidate potential customers and others from doing business with the respondents. These letters were also intended to deceive their recipients;
• the appellants illegally put pressure on the Union to bring the related employer application before the OLRB; and
• the appellants initiated frivolous and vexatious legal proceedings against former employees who set up competing firms, or firms operating in a related stream of the restoration industry, in order to cause irreparable economic and reputational harm to those competing firms.

[8] Brook demanded that TruGrp withdraw from its OLRB response the discontinued statement of claim and the allegedly false statements. TruGrp refused. The Union, with Brook’s support, moved to strike the impugned portions of TruGrp’s Response. The OLRB dismissed the motion to strike.

Current Proceedings

[9] In July 2019, the appellants commenced this action against the respondents, based on the respondents’ use of the impugned expressions in their OLRB pleadings. The appellants sought damages for defamation, unlawful interference with economic and contractual relations, and abuse of process.

[10] In response, the respondents brought a motion under s. 137.1 of the Courts of Justice Act to have the appellants’ action dismissed as a SLAPP. The respondents argued this action was an attempt to limit the respondents’ freedom of expression on matters of public interest. Primarily, the respondents argued the impugned expressions contained in the discontinued statement of claim related to a matter of public interest because they spoke to the appellants’ pattern of using litigation to gain an economic advantage over competitors, affect the union certification process, and interfere with employees’ freedom of association.

[11] The motion judge allowed the anti-SLAPP motion and dismissed the appellants’ action on the basis that TruGrp’s response in the OLRB application constituted an expression made in relation to a matter of public interest:

there is a public interest in how the operation of restoration work in the province in conducted. It is also in the public interest with regard to the involvement in retaining other businesses to do that type of work. This includes businesses that are subject to collective bargaining or workers represented by unions and activities within the jurisdiction of the OLRB. The parties to the action before me raise allegations of prohibited practices such as price covering.

[12] Having found that the respondents met their threshold burden, the motion judge considered whether the appellants could show, pursuant to s. 137.1(4)(a), that the action had substantial merit and that the respondents had no valid defence. Although the motion judge concluded that the appellants’ action had substantial merit, he held that the appellants failed to show the respondents had no valid defence.

[13] In concluding that the appellants failed to show the respondents lacked a valid defence, the motion judge held that the impugned expression fell within the doctrine of absolute privilege. He recognized that absolute privilege would not apply if the expression was not made for the purpose of the OLRB proceeding. However, he concluded that the discontinued statement of claim added value to TruGrp’s position before the OLRB. He found that TruGrp referenced the preservation letters and Brook’s allegations against TruGrp in order to support TruGrp’s position that it was not Brook’s successor employer. Consequently, the motion judge found that TruGrp’s response in the OLRB proceeding, which included references to the discontinued statement of claim, fell under the protection of absolute privilege.

[14] Finally, the motion judge concluded that the harm Brook suffered from TruGrp including the discontinued statement of claim in the response was not sufficiently serious to warrant permitting the action to proceed.

Issues on Appeal

[15] The appellants effectively argue that the motion judge made three errors:

1. the motion judge characterized the respondents’ expression too broadly for the purposes of analysis under s. 137.1(2) and further erred in concluding that the expression was a matter of public interest;
2. the motion judge erred in interpreting the “merits” test; and
3. the motion judge erred in finding the appellants did not tender sufficient evidence of harm to permit the action to proceed.

Analysis

Is the expression a matter of public interest?

(1) Principles

[16] To satisfy the threshold requirements under s. 137.1(3), the moving party must show (i) the “proceeding arises from an expression made by the moving party”, and (ii) “the expression relates to a matter of public interest”: 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, 449 D.L.R. (4th) 1, at para. 21. Here, there is no dispute that the pleadings constitute expression. This appeal turns on whether the respondents’ expression relates to a matter of public interest.

[17] The purpose of s. 137.1, as explained in Pointes, is “to circumscribe proceedings that adversely affect expression made in relation to matters of public interest, in order to protect that expression and safeguard the fundamental value that is public participation in democracy”: at para. 30. It is not a new form of summary trial on the merits of a defamation action but is instead meant to provide an early and cost-effective means of ending litigation brought by a plaintiff to silence a party who has spoken on a matter of public interest: Sokoloff v. Tru-Path Occupational Therapy Services Ltd., 2020 ONCA 730, 153 O.R. (3d) 20, at para. 47. Its paradigmatic application is to prevent others from silencing persons who are speaking on matters that have significance beyond themselves.

[18] The scope of s. 137.1’s protection is set using the concept of the public interest. This is a concept that many have found difficult to apply. The most detailed exploration of the concept is provided in Grant v. Torstar, 2009 SCC 61, [2009] 3 S.C.R. 640, in the analogous context of the law of defamation. That case emphasizes that the public interest is not a descriptive concept: it is not a matter of ascertaining what the public, or any subgroup, believes to be interesting, entertaining, or worth their attention: at para. 102. Instead, “there is necessarily a normative aspect to what is ‘genuinely’ a matter of public interest”: Sokoloff, at para. 18. That is, the statement must address an issue “about which the public has some substantial concern because it affects the welfare of citizens, or one to which considerable public notoriety or controversy has attached”: Grant, at para. 105, citing Raymond E. Brown, The Law of Defamation in Canada, loose-leaf, (2008-Rel. 3) 2nd ed. (Scarborough: Carswell, 1999), vol. 2, at pp. 15-137 and 15-138. Again, the fact of notoriety or controversy is not sufficient in itself — one must assess the reason for the notoriety.

[19] The public interest includes such matters as the establishment, use, allocation, and maintenance of shared public goods, and therefore protects discussion and advocacy about the distribution of benefits and burdens of social life. But the public interest is not necessarily limited to matters of shared public life: Grant, at para. 106. There is, after all, a public interest in maintaining peaceful relations between persons in society and in drawing attention to acts of injustice. But the resolution of purely private disputes between more or less equals—disputes that have no immediate bearing on the rights or obligations of others—can seldom be a matter of public interest: Sokoloff, at para. 19.

(2) Application

[20] The appellants argue that the motion judge erred by characterizing the relevant expression as the response as a whole. Thus, he held that “there is a public interest in how the operation of restoration work in the province is conducted”, as well as in “retaining other businesses”—including businesses “that are subject to collective bargaining” and “workers represented by unions and activities within the jurisdiction of the OLRB”—to perform restoration work.

[21] The motion judge erred by failing to analyze the specific statements that were the subject of the appellants’ action. This includes the allegedly defamatory statements in the statement of claim appended to the response, as well as the 11 paragraphs in the response repeating the points made in that attachment. It is only these statements that constitute the relevant expression for the purposes of the s. 137.1 motion. The remaining statements contained in the response and the appended statement of claim were not the subject of the appellants’ action, and the appellants had not attempted to use legal process to prevent or discourage the respondents from making those statements. The whole of the response provides relevant context for understanding the 11 paragraphs itemized in the defamation action and can be considered for that purpose. However, the expression that is the relevant subject matter for the motion is the 11 paragraphs in the response and the portions of the statement of claim from which those paragraphs originate.

[22] The subject of those paragraphs, summarized above, is best characterized as an allegation that a building restoration business engaged in conduct that was tortious and contrary to labour law, in order to harm its competitors and gain an unfair advantage.

[23] We agree with the appellants that the motion judge erred in finding the expression relates to a matter of public interest. Activity that unfairly reduces competition is a matter of public interest, in the sense that justice requires that such actions be proscribed for the common good. But that does not mean that every occurrence of this type of misconduct is a matter of public interest, having significance to anyone other than the parties involved and the institutions established to resolve their disputes. The nature of the respondents’ expression is fundamentally a private dispute, to which s. 137.1 does not apply.

[24] In light of our finding, the respondents’ s. 137.1 motion fails at the s. 137.1(3) threshold stage. Accordingly, it is not necessary that we address the other issues raised by the appellants.

[25] There is no reason why the appellants’ action should not proceed to adjudication. In so holding, however, we should not be taken as having expressed any opinion on the merits of that action.

Disposition

[26] The appeal is allowed, the order below is set aside, and the action is restored. If the parties are unable to agree on the costs of the appeal, they may each file written submissions, not to exceed three pages, and a bill of costs, within 14 days.

“P. Lauwers J.A.”

“B.W. Miller J.A.”

“I.V.B. Nordheimer J.A.”