Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20210414 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.

Costs Endorsement

[1] By reasons dated January 18, 2021, this court allowed the appeal of Subway Franchise Systems of Canada, Inc., Subway IP Inc., and Doctors Associates Inc. (“Subway”) and held that the appellants were entitled to partial indemnity costs: 2021 ONCA 26, at paras. 109-110. The panel has considered the parties’ written cost submissions.

[2] Subway seeks partial indemnity costs of $61,291.30, all-inclusive.

[3] The respondents, Canadian Broadcasting Corporation, Charlsie Agro, Kathleen Coughlin, and Eric Szeto (“CBC”), make two submissions:

(i) They ask this court to reconsider its award of partial indemnity costs to Subway in light of the decisions of the Supreme Court of Canada in 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, 449 D.L.R. (4th) 1 (“Pointes”) and Bent v. Platnick, 2020 SCC 23, 449 D.L.R. (4th) 45 (“Bent”) and find that Subway is not entitled to its costs of the appeal under “the usual costs rule set out in the anti-SLAPP regime”; and

(ii) If this court maintains its award of partial indemnity costs to Subway, the appropriate award of costs should be in the range of $17,000.

[4] For the reasons that follow, we do not disturb our award of partial indemnity costs of the appeal to Subway.

[5] Under cost regime set out in s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C.43, the presumptive entitlement to costs depends upon whether the judge dismisses the proceeding in response to the motion. If a judge dismisses a proceeding under s. 137.1, the moving party (i.e. the defendant) is entitled to costs of the motion and proceeding on a full indemnity basis “unless the judge determines that such an award is not appropriate in the circumstances”: s. 137.1(7). However, if the judge does not dismiss a proceeding, the responding party (i.e. the plaintiff) is not entitled to costs on the motion “unless the judge determines that such an award is appropriate in the circumstances”: s. 137.1(8).

[6] In Pointes and Bent, the Supreme Court considered the application of the s. 137.1 costs regime to the appeals heard by that court: Pointes, at para. 129; Bent, at para. 179.

[7] In Pointes, the motion judge had dismissed the defendants’ s. 137.1 motion and allowed the plaintiff’s action to proceed. This court allowed the defendants’ appeal and dismissed the plaintiff’s action. The Supreme Court reached the same conclusion as this court and upheld the dismissal of the plaintiff’s action: at para. 97. The Supreme Court awarded the respondents – i.e. the defendants – party-and-party costs “as per this Court’s ordinary practice”. In the result, that cost award followed the s. 137.1(7) cost regime to the extent of awarding costs to the defendants who had succeeded in dismissing the plaintiff’s action. However, the Supreme Court did not apply s. 137.1(7)’s presumptive entitlement to full indemnity costs, instead awarding costs on a lower scale: at para. 129. The reasons in Pointes do not explain why full indemnity costs were not awarded, suggesting that on an appeal the quantum of costs awarded lies within the discretion of the appellate court.

[8] In Bent, the motion judge had allowed the defendants’ s. 137.1 motion and dismissed the plaintiff’s action. This court reversed, dismissed the defendants’ s. 137.1 motion, and allowed the plaintiff’s action to proceed. The Supreme Court dismissed the defendants’ appeals, affirmed the dismissal of the defendants’ s. 137.1 motion, and allowed the plaintiff’s action to proceed: at para. 175.

[9] This court awarded the plaintiff, Dr. Platnick, partial indemnity costs of the appeal in the amount of $20,000: Platnick v. Bent, 2018 ONCA 851, 83 C.C.L.I. (5th) 308, at para. 5. The Supreme Court dismissed the appeals from this court: at para. 178. The Supreme Court did not award any costs of the appeals to it, stating, at para. 179:

With regard to costs, as I said in Pointes Protection, the legislature expressly contemplated a costs regime for s. 137.1 motions. Indeed, s. 137.1(8) sets out a default rule that when a s. 137.1 motion is dismissed, neither party shall be awarded costs, unless a judge determines that “such an award is appropriate in the circumstances”. Here, no such award would be appropriate: I do not take Ms. Bent’s s. 137.1 motion to be an instance of frivolous motion practice to delay Dr. Platnick’s defamation claim against her; rather, Ms. Bent’s use of s. 137.1 — especially given the substantial uncertainty due to the lack of judicial guidance at the time of serving the motion — was a bona fide use of this new mechanism. I would award no costs.

[10] In Pointes and Bent the Supreme Court considered the s. 137.1 cost regime when dealing with the costs of the appeal to that court. However, in Pointes, that court departed from the presumption contained in s. 137.1(7). This court, in its decision in Pointes, stated that the discretion to award the costs of an appeal should have due regard to the policy underlying the cost regime created by s. 137.1(7) and (8): 1704604 Ontario Ltd. v. Pointes Protection Association, 2018 ONCA 853, 23 C.P.C. (8th) 350. Accordingly, under either approach, when considering the issue of the costs of an appeal, the discretion of the appellate court must be informed by the policy found in ss. 137.1(7) and (8).

[11] In the present case, two factors led us to exercise our discretion to award Subway partial indemnity costs of its appeal. First, this has been expensive litigation and Subway has had to incur significant costs on both the motion below and the appeal in order to clear the way for the trial of its action on the merits. Second, the hearing of CBC’s s. 137.1 motion took place slightly over a year after this court had released its decisions in 1704604 Ontario Ltd. v. Pointes Protection Association, 2018 ONCA 685, 142 O.R. (3d) 161, and five other appeals involving s. 137.1. As the parties acknowledged before this court, the Supreme Court largely affirmed this court’s approach in Pointes with some minor modifications: Subway, at para. 11. Accordingly, unlike the Bent case, the parties had the benefit of substantial judicial guidance on the operation of s. 137.1 long before CBC’s motion was heard. Given those circumstances, Subway was entitled to some costs of its successful appeal. [1]

[12] As to the quantum, we conclude that an award of partial indemnity costs of the appeal in the amount of $40,000, all-inclusive, constitutes a fair and reasonable award in the circumstances, and we order CBC to pay Subway that amount within 30 days of the release of these reasons.

“David Brown J.A.”

“B. Zarnett J.A.”

“J.A. Thorburn J.A.”

[1] A similar result was reached in another post-Pointes/Bent decision of this court: Sokoloff v. Tru-Path Occupational Therapy Services Ltd., 2020 ONCA 730, 452 D.L.R. (4th) 712, costs reported at 2020 ONCA 849.