Court File and Parties

COURT FILE NO.: CV-14-515899 DATE: 20161006 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Dale & Lessman LLP, Robert E. Dale, David E. Mende, Christina J. Wallis, Kagan Shastri LLP, Rahul Shastri, David Winer, Stancer Gossin Rose LLP, Raymond Stancer, Eric Gossin, Mitchell Rose, Garth Dingwall, and Ralph Steinberg, J. David Sloan, Peoples Trust Company, Derek Peddelesden, Frank Renou, Martin Mallich and Sharon Small, Plaintiffs

AND: Nadire Atas and 626381 Ontario Limited, Defendants

BEFORE: D.L. Corbett J.

HEARD: In Chambers, in Writing

Endorsement

[1] The plaintiffs seek an interlocutory injunction pending trial, to restrain Ms. Atas from publishing defamatory statements about them.

[2] This case arises from lengthy legal proceedings which I will summarize here only briefly.

[3] Ms. Atas is a party in roughly thirty proceedings against various parties arising from mortgage transactions in the early years of this millennium. Initial proceedings were brought by lenders against Ms. Atas. The lenders were successful in the Superior Court and at the Court of Appeal. Current proceedings involve lawyers acting for and against Ms. Atas, Home Trust (a succeeding lender with whom Ms. Atas refinanced the property), and related parties.

[4] Proceedings were stayed for a period because Ms. Atas was allegedly incapable legally by reason of mental illness; the Public Guardian and Trustee was involved on her behalf in some proceedings, for a time. Then a motion was brought to determine Ms. Atas' ability to conduct her own proceedings. Stinson J. found that she was legally capable and the PGT ceased its involvement.

[5] Stinson J. had been case managing proceedings involving Ms. Atas. Following Stinson J.'s decision respecting Ms. Atas' legal capacity (in which Ms. Atas was successful), Ms. Atas brought motion that Stinson J. recuse himself for reason of reasonable apprehension of bias. That motion did not proceed; Stinson J., who had managed the proceedings for some time, concluded that the parties should not be put to the expense and delay of a recusal motion and stepped aside. I was appointed in his stead.

[6] At the time I was appointed various parties involved in these proceedings applied under s.140 of the Courts of Justice Act to have Ms. Atas declared a vexatious litigant. I stayed all the legal proceedings pending determination of that application. That application was heard on the merits in September 2015 and for reasons I shall explain is still under reserve.

[7] During the course of readying the s.140 application, two issues arose that have some bearing as background to the current motion. First, Ms. Atas sought to adduce a record on the merits for various of the outstanding proceedings as part of her defence of the s.140 application: she reasoned that if her claims appeared to have merit, this would bear on whether she was acting reasonably or vexatiously. The moving parties argued that while the merits were not irrelevant to the s.140 application, they should be addressed on the strength of the pleadings. They argued that it made no sense to try the merits of all the proceedings as a step in the vexatious litigant proceedings; otherwise the purpose of the s.140 application would be frustrated by its own process. I generally agreed with the applicants on this issue, though the issue is more nuanced than this simple description would suggest: my full explanation of this point will be set out in my decision on the s.140 application. For present purposes what is significant is that I did not permit Ms. Atas to lead evidence on the underlying merits and did not permit her to cross-examine the applicants' witnesses on this area. Ms. Atas was clear (in a respectful way) in the case management process that she did not agree with this ruling and did not think it was fair. She is frustrated that she has not had her day in court on the issues she has raised in the underlying proceedings.

[8] Second, Ms. Atas has raised repeated recusal motions. I have already described the allegation that Stinson J. showed a reasonable apprehension of bias. That allegation did not proceed to a motion because I became the case management judge, as I have already described. Then, during the case management process, some weeks after I had directed that the s.140 application would proceed before me on a particular schedule, Ms. Atas took the position (a) that I should not hear the application because I am the case management judge; and (b) that the application should not be heard by any of some 25 judges who had presided over some step in her matters previously. The former concern I considered to have sufficient substance to require a motion. The second suggestion I dismissed summarily at a case management conference as patently without merit.

[9] I directed that the request that I recuse myself from the s.140 application be heard in advance of the return of the s.140 application so that the parties would not waste time in unnecessary preparation. After that motion was argued I ruled that I should not recuse myself from the s.140 application, but rather, should hear it in my capacity as case management judge, as part of the management of Ms Atas’ litigation.

[10] The s.140 application was argued before me on the merits roughly ten weeks after I dismissed the recusal motion, in September 2015. Argument took a full day after which I reserved my decision.

[11] Shortly after I had taken the s.140 application under reserve, Ms. Atas published numerous statements on the internet about the parties adverse to her in the underlying litigation, including (but not restricted to) many of the moving parties on the s.140 application.

[12] The applicants then sought to re-open the evidence on the s.140 application to introduce evidence of the defamatory statements. Some of the persons who were the subject of Ms. Atas' internet statements retained separate counsel and brought a motion for an interim injunction to restrain Ms. Atas from defaming them.

[13] Ms. Atas opposed the introduction of further evidence and resisted the interim injunction.

[14] On the interim injunction I concluded that the impugned publications were obviously defamatory. They stated that the adverse parties were "fraudsters".

[15] It is well accepted that a defamatory statement is one that has a tendency to lower the reputation of the person to whom it refers in the estimation of right-thinking members of society generally, and in particular, to cause him or her to be regarded with feelings of hatred, contempt, ridicule, fear, dislike or disesteem. These standards are judged objectively, by the standard of an ordinary right-thinking member of society. [1] Calling a professional person a fraudster is defamatory by this objective standard.

[16] Many of the targets of these statements are professional persons, and no court has found them to have committed acts of dishonesty against Ms. Atas. Many of the statements made by Ms. Atas are part of the central narrative of the cases she has brought that are the subject of the vexatious litigant proceedings. At the risk of oversimplification, Ms. Atas took her grievances to the internet, having been frustrated in her efforts to argue their merits in the vexatious litigant proceedings. It is a reasonable inference that the timing of the publications was no accident, coming immediately after argument of the s.140 application.

[17] Having granted the interim injunction, I then set a schedule to bring the issue of an interlocutory injunction until trial back for a hearing, once Ms. Atas had a chance to deliver responding materials and a statement of defence. This process of exchanging materials unfolded over a period of many months.

[18] Ms. Atas delivered materials in April 2016. In them she acknowledged that she had published many of the impugned words. On their face, the words are "of and about" the plaintiffs. And, as I noted in January in my ruling on the interim injunction, the words are clearly defamatory. Thus the question between the parties seems to be focused on whether Ms. Atas has a defence to the claim that she has published these defamatory words about the plaintiffs. In oral argument at the time of the interim injunction, Ms. Atas was clear that she believes that the impugned words are true. This, it seems, is her primary defence for publishing them.

[19] Subsequent to the delivery of Ms. Atas' materials a case conference was held at which I set deadlines for delivery of further materials and Ms. Atas' statement of defence (there had been a previous deadline for the pleading, which had been missed). I set September 6, 2016 for argument of the interlocutory injunction before me.

[20] The plaintiffs complied with the deadlines imposed upon them. Ms. Atas did not. Roughly a week before the motion was to be argued a further case conference was held because of the state of the record. Ms. Atas asked that the motion be adjourned so that she could file further materials and her statement of defence. Ms. Atas did not have an explanation for her failure to follow the schedule that had been imposed. She had not yet delivered her statement of defence and she had not served the additional materials on which she wished to rely. Dates for cross examinations had come and gone and none had been held (the plaintiffs electing not to conduct cross examinations, given the state of the record).

[21] Three other events occurred while the injunction motion was in preparation. First, the plaintiffs alleged that Ms. Atas had breached the interim injunction and they brought a motion that she be held in contempt. I concluded that the issues on the contempt motion were discrete and that another judge could hear that motion without any substantial inefficiency. I made directions for the conduct of that motion, which was eventually scheduled for return in October 2016. Second, Ms. Atas indicated that she wished to bring a motion to adduce fresh evidence of her own on the s.140 application. During the case management conferences at which this issue was canvassed it seemed to me that the evidence in question existed prior to the time that the s.140 application was argued. However, in the absence of a motion from Ms. Atas, it was unclear whether her request could succeed. I directed her that I would decide that motion if and when she brought it. The issue has been raised at subsequent case management conferences but the motion has not yet been brought.

[22] And finally, Ms. Atas advised that she wished to bring a motion that I recuse myself from all matters in which she is involved on the basis of a reasonable apprehension of bias. I advised her that if she wished to bring such a motion then she should deliver her motion materials. I directed that the respondents not deliver responding materials until I had an opportunity to review the motion materials delivered by Ms. Atas.

[23] By the end of August 2016, Ms. Atas had not brought either her motion for fresh evidence on the s.140 application or in respect to the proposed recusal motion. She also had not delivered her statement of defence in the defamation proceedings.

[24] On the day of the interlocutory injunction motion, Ms. Atas arrived with a motion record which she asked me to accept as part of the record for the motion. In it she raised the issue of recusal. I refused to permit this evidence into the record on the day of the motion on the basis that it would be unfair to the plaintiffs. Ms. Atas had still not delivered her statement of defence to the defamation proceedings. She had been in possession of a statement of claim from the plaintiffs since about the end of January, and deadlines had been imposed for her pleading at a case conference back in March 2016.

[25] The motion for the interlocutory injunction proceeded as scheduled on September 6th. Ms. Atas had not delivered a factum for the motion, and in oral argument she set out to go through the statements she had published to argue for the truth of the impugned publications (which are many thousands of pages in length). No progress was made towards a coherent and systematic argument. It became clear that she wished to use the motion as a framework for arguing the merits of the cases that are stayed pending decision on the s.140 application, something she felt she should have been permitted to do, and was prevented by me from doing, on the s.140 application itself.

[26] I understand Ms. Atas' frustration. She feels that she has never been heard, and she fears that she never will be. Her response, however, has not been constructive and has only served to strengthen the case for the s.140 application against her. For the reasons that follow the interlocutory injunction is granted pending trial of the action or further court order.

1. Injunction Test

[27] The test for an injunction is set out in the Supreme Court of Canada's decision in RJR Macdonald:

(a) Is there a serious issue to be tried? (b) Has the plaintiff shown irreparable harm? (c) Does the balance of convenience favour granting the injunction? [2]

(a) Serious Issue to be Tried

[28] In cases where the plaintiffs seek to restrain speech, the test on the merits is more stringent. Where a defendant has pleaded the defence of justification, appellate courts have held that the plaintiff must establish a high degree of certainty that it will succeed on the issue of liability. The precise formulation of the test is not entirely clear, with some dicta going so far as to suggest that only where it is "impossible" for the defendant to justify the words that they should be restrained on an interlocutory basis.

[29] This requirement has been interpreted contextually in some of the cases, and in my view that approach is the correct one: all of the circumstances of the case must be considered in order to decide if the plaintiff's case is strong enough to warrant an interlocutory injunction. [3]

[30] I cannot conclude that each and every one of the impugned statements is impossible of justification. Indeed, from a practical point of view, I cannot realistically even make a preliminary determination of the fair meaning of each and every one of the thousands of impugned statements. What I can say, based on my reading of the impugned publication, is that Ms. Atas has set out on a systematic campaign of character assault against the plaintiffs, with the overall sense of the allegations being that they are dishonest, have committed acts of fraud, and have acted with gross incompetence.

[31] There is a further concern. The parties, including Ms. Atas, have been subject to case management to reduce the burdens on the court system of the unwieldy litigation that has resulted from their disputes. Ms. Atas has turned to the internet at least in part to escape the constraints of the case management regime to which she is subject, thereby fomenting yet another round of litigation. On the record before me, I am satisfied that this was deliberate, to circumvent the directions I have given that the merits of the underlying cases not be litigated until decision on the s.140 application. This tactic is not a breach of any court order, but it is nonetheless seeks to achieve indirectly that which Ms. Atas has not been permitted to do directly. It is a continuation of the behaviour which the s.140 applicants have characterized as vexatious. And it also could be characterized in a way to defeat potential defences to the defamation allegations other than justification on the grounds of malice.

[32] On balance, I am satisfied that it will not be possible for Ms. Atas to justify the impugned statements, taken as a whole. That, in my view, in the context of this case, is sufficient to establish the first stage of the test under RJR Macdonald.

2. Irreparable Harm

[33] The harm here is obvious. In oral argument Ms. Atas explained that the materials have been posted to mirror sites beyond the jurisdiction of the Canadian courts, and thus it may not be possible to remove all the postings. It was not clear to me on the record whether this is because Ms. Atas posted to such sites at the outset, or whether this is a result of repostings over which she has no control. Either way, the risk is material that further postings could continue to create a large body of scurrilous materials about the plaintiffs that will likely reside in the public domain for the long term.

[34] Second, damages will not be an adequate remedy for the plaintiffs. Ms. Atas has told me that she is impecunious (an issue that has arisen in the context of representation for her in the contempt proceedings, and which she raised when she suggested that I should appoint counsel for her, at public expense, to represent her in the civil proceedings before me). Over the roughly two years that I have managed these proceedings I have made one costs order against Ms. Atas, for $1,500. She has not paid them. She explained to me that she was able to borrow for her disbursement expenses for transcripts, but not to raise funds to pay the costs ordered against her. I am satisfied that Ms. Atas cannot and will not pay any damages awarded against her. Therefore damages will not be an adequate remedy for the plaintiffs if they succeed at trial.

3. Balance of Convenience

[35] In my view the balance of convenience weighs strongly in favour of the plaintiffs here. The matters in question have, for the most part, languished in the litigation system for many years. Such public interest as there might be in these matters will not be diminished by a delay while the litigation process takes its course. Ms. Atas' own sense of personal frustration is not sufficient to weigh in the balance here: and it must be weighed against the frustration felt by the plaintiffs in being entangled in these interminable conflicts with Ms. Atas.

4. Statement of Defence

[36] At this point, Ms. Atas has pleaded nothing, having failed to deliver her statement of defence in violation of court-ordered schedules. I considered resting this decision on this point. And it would not be entirely unjust to do so: Ms. Atas has not defended as yet, and so it would hardly be unfair to her to be told that she has forfeited her chance to defend the interlocutory injunction. But on balance I prefer to rest my decision on the merits as Ms. Atas has said she intends to defend. However there is a caveat to that, which I indicated at our last case management conference and which I reiterate here. Ms. Atas has a new deadline to deliver her statement of defence. If she does not do so within that deadline, then the plaintiffs will be permitted to note her in default and proceed with a motion for a default judgment.

5. Costs

[37] The plaintiffs have asked for costs of the injunction motion. The usual practice when an injunction is denied is to award costs to the defendant, and where an injunction is granted, to leave the issue of costs to the trial judge. I see no reason to depart from that general principle here. Costs of the injunction motions for both the interim and the interlocutory injunctions are left in the discretion of the trial judge.

Citations

[1] Botiuk v. Toronto Free Press Publications Ltd., [1995] 3 S.C.R. 3 at para. 62; Colour Your World v. Canadian Broadcasting Corp. (1988), 38 O.R. (3d) 97 (C.A.).

[2] RJR Macdonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, para. 48.

[3] See Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 S.C.R. 626 at 667; Rapp v. McClelland & Stewart Ltd. (1981), 34 O.R. (2d) 452 (Ont. H.C.J.); Henderson v. Pearlman, 2009 ONSC 43641; Palen v. Dagenais, 2012 SKQB 383.

D.L. Corbett J.

Date: October 6, 2016