Court of Appeal for Ontario

Date: 2022-12-07 Docket: C70137

Judges: Lauwers, Roberts and Miller JJ.A.

Between: Jeff Thorman and Michelle Thorman Plaintiffs (Appellants/Respondents by way of cross-appeal)

And: Krista McGraw Defendant (Respondent/Appellant by way of cross-appeal)

Counsel: J.F. Lalonde and Andrew Donaldson, for the appellants/respondents by way of cross-appeal Karin M. Pagé and Jessica Barrow, for the respondent/appellant by way of cross-appeal

Heard: September 28, 2022 by video conference

On appeal from the order of Justice Robert J. Smith of the Superior Court of Justice, dated November 19, 2021, with reasons reported at 2021 ONSC 7671, and from the costs order dated January 26, 2022.

Roberts J.A.:

Overview

[1] This appeal involves the consideration of s. 137.1 [1] of the Courts of Justice Act, R.S.O. 1990, c. C.43, commonly known as the “anti-SLAAP” provision, in the context of a private contractual dispute. It arises out of a failed bathroom renovation contract between the parties. The respondent was unhappy with the appellants’ work and posted very negative online reviews and comments about the appellants and their businesses, calling them “fraudsters” and “scammers”, among other disparaging descriptions. The appellants commenced an action against the respondent, seeking over $500,000 in damages for defamation. The respondent successfully brought a motion under s. 137.1 and obtained a dismissal of the action. The appellants appeal the dismissal of their action, and the respondent cross-appeals to increase the motion judge’s partial indemnity costs order made in her favour.

[2] For the reasons that follow, I would allow the appeal and dismiss the cross-appeal.

Legislation

[3] Section 137.1 was enacted against the use of legal processes (“strategic lawsuits against public participation” or “SLAPPs”) as a tool to shut down the expression of matters of public interest: 170464 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, 449 D.L.R. (4th) 1, at paras. 1, 2-4, 16. It was not intended to foreclose the adjudication on the merits of legitimate defamation or other actions that concern purely private and commercial disputes and that do not involve expressions on matters of public interest. Accordingly, s. 137.1 protects expression whose subject matter is genuinely a matter of public interest, while providing that a plaintiff with a legitimate claim is not unduly deprived of the opportunity to pursue it: Bent v. Platnick, 2020 SCC 23, 449 D.L.R. (4th) 45, at para. 74; Pointes, at para. 46.

[4] Motions under s. 137.1 are not motions for summary judgment. There is no adjudication or prejudging of the merits of the underlying proceeding. Courts must carefully guard against conflating the two and ensure that they engage in a robust analysis of the criteria under s. 137.1. See Sokoloff v. Tru-Path Occupational Therapy Services Ltd., 2020 ONCA 730, 153 O.R. (3d) 20, at para. 47; Grist v. TruGrp Inc., 2021 ONCA 309, at paras. 17-18; Platnick, at para. 158.

Motion Judge’s Decision

[5] The motion judge found under s. 137.1(3) that the respondent’s expression of her views related to a matter of public interest as a consumer review. He concluded that the appellants had met their onus under s. 137.1(4)(a): the appellants’ action had substantial merit; the respondent had no valid defences; and her statements indicated an intention to cause harm to the appellants, which the motion judge found was evidence of malice. However, the motion judge concluded that the appellants did not satisfy s. 137.1(4)(b). He determined that the appellants’ action bore hallmarks of a SLAPP lawsuit and that their damages were nominal. As a result, he dismissed the action, concluding that “the [appellants] have not met their onus to show that they have suffered any harm from [the respondent’s] expression in her Post and the public interest in allowing their defamation claim to proceed is outweighed by the public interest in protecting [the respondent’s] expression to warn fellow homeowners about unreliable contractors”. He declined to grant the respondent full indemnity costs and fixed costs in the all-inclusive amount of $25,000.

Issues

[6] The appellants submit that the motion judge erred in his analysis of the fourth criterion under s. 137.1(4)(b), namely, that “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.” Specifically, the appellants argue that the motion judge erred by considering irrelevant factors, misapprehending the evidence and the law in relation to the question of reputational harm and damages, and failing to analyze the qualitative nature and motivation of the respondent’s expression.

[7] I agree.

Analysis

(1) The correct approach under s. 137.1(4)(b)

[8] Because the motion judge erred in his analysis of the relevant factors under s. 137.1(4)(b), I begin with the correct analytical approach articulated by the Supreme Court in Pointes and Platnick, which were heard and released together. Both cases provide guidance on how to properly apply the framework under s. 137.1. For the purposes of this appeal, my analysis is focussed on the recommended analytical framework under s. 137.1(4)(b).

[9] In Pointes, Côté J. for a unanimous court described section 137.1(4)(b) as “the core of s. 137.1” and “the key portion of the s. 137.1 analysis” that “engages with the overarching concern that this statute, and anti-SLAPP legislation generally, seek to address by assessing the public interest and public participation implications”, its purpose being to “function as a mechanism to screen out lawsuits that unduly limit expression on matters of public interest”: at para. 62. It is the burden of the plaintiff/responding party “to show on a balance of probabilities that it likely has suffered or will suffer harm, that such harm is a result of the expression established under s. 137.1(3), and that the corresponding public interest in allowing the underlying proceeding to continue outweighs the deleterious effects on expression and public participation” (emphasis in the original): at para. 82. See also Platnick, at paras. 139-141.

[10] The required analysis under s. 137.1(4)(b) is set out in two stages: the harm analysis; and the weighing analysis: Pointes, at paras. 68-82; Platnick, at paras. 139-142.

(a) The harm analysis

[11] At the harm analysis stage, the question is whether harm caused by the expression is likely to be or has been suffered. Either monetary or non-monetary harm can be relevant to the demonstration of (i) the existence of harm and (ii) causation, namely, that the harm was suffered as a result of the moving party’s expression.

[12] Harm need not be “monetized”. A “definitive determination of harm or causation” is not required. Nor is a “fully developed damages brief” required. Instead, a plaintiff must simply “provide evidence for the court ‘to draw an inference of likelihood in respect of the existence of the harm and the relevant causal link’”. See Pointes, at para. 71; Platnick, at paras. 145, 154.

(b) The weighing analysis

[13] Once harm has been established and shown to be causally related to the expression, the question becomes whether the harm outweighs the public interest in protecting the expression. This weighing exercise is “the crux or core of the s. 137.1 analysis”: Pointes, at para. 82.

[14] The weighing analysis looks to the fundamental values underlying freedom of expression under s. 2(b) of the Canadian Charter of Rights and Freedoms, such as “the search for truth, participation in political decision making, and diversity in forms of self-fulfilment and human flourishing”, because “[t]he closer the expression is to any of these core values, the greater the public interest in protecting it”: Pointes, at para. 77.

[15] As part of the weighing exercise, the court must engage in a qualitative analysis of the expression in issue, including the motivation behind it, to assess the public interest in protecting the expression. In this way, the weighing analysis under s. 137.1(4)(b) is different from the analysis of the public interest under s. 137.1(3), a low threshold that does not engage a qualitative assessment. See Pointes, at para. 28, 74-75; Platnick, at para. 84. As defamatory statements and personal attacks are “very tenuously” related to the core values which underlie s. 2(b) of the Charter, “there will be less of a public interest in protecting a statement that contains ‘gratuitous personal attacks’ and the ‘motivation behind’ the expression will be relevant to the inquiry”: Platnick, at para. 163.

[16] In discussing factors that may bear on the public interest weighing exercise under s. 137.1(4)(b), at para. 78 of Pointes, Côté J. reviewed and narrowed the relevance of the four indicia relied upon by the Court of Appeal in Platnick and other prior cases as they relate to the merits of a s. 137.1 motion, namely: a history of the plaintiff using litigation or the threat of litigation to silence critics; a financial or power imbalance that strongly favours the plaintiff; a punitive or retributory purpose animating the plaintiff’s bringing of the claim; and minimal or nominal damages suffered by the plaintiff. She instructed that

“the only factors that might be relevant in guiding that weighing exercise are those tethered to the text of s. 137.1(4)(b), which calls for a consideration of: the harm suffered or potentially suffered by the plaintiff, the corresponding public interest in allowing the underlying proceeding to continue, and the public interest in protecting the underlying expression”

because “the s. 137.1(4)(b) stage is fundamentally a public interest weighing exercise and not simply an inquiry into the hallmarks of a SLAPP”: at para. 79.

[17] At para. 80 of Pointes, Côté J. reviewed the following additional factors that “may also prove useful” in the analysis, but still only to the extent that they are tethered to the text of s. 137.1(4)(b) and the considerations explicitly contemplated by the legislature:

[T]he importance of the expression, the history of litigation between the parties, broader or collateral effects on other expressions on matters of public interest, the potential chilling effect on future expression either by a party or by others, the defendant's history of activism or advocacy in the public interest, any disproportion between the resources being used in the lawsuit and the harm caused or the expected damages award, and the possibility that the expression or the claim might provoke hostility against an identifiably vulnerable group or a group protected under s. 15 of the Charter or human rights legislation. [Emphasis in the original.]

[18] While providing guidance on some of the relevant factors that may inform the analysis, Côté J. reminded that the “open-ended nature of s. 137.1(4)(b) provides courts with the ability to scrutinize what is really going on” and that s. 137.1(4)(b) “effectively allows 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.

(2) The motion judge’s analysis under s. 137.1(4)(b)

[19] The motion judge erred in his application of s. 137.1(4)(b). The motion judge’s analysis was narrow and one-sided, devolving primarily into an inquiry about the hallmarks of a SLAPP lawsuit and a determination of whether the appellants had proven any actual damages. As a result, he failed to undertake a full analysis of what was “really going on in the particular case” before him, including whether the plaintiff had suffered or was likely to suffer reputational harm, and whether the respondent’s expression was qualitatively worthy of protection.

(a) The motion judge unduly focused on the hallmarks of a SLAPP lawsuit

[20] The motion judge’s consideration of s. 137.1(4)(b) started with an analysis of the evidence that he concluded “indicates that [the appellants] have taken actions to silence critics, which is a hallmark of a SLAPP lawsuit”, as follows:

a) They have sued [the respondent] for $525,000 for damages, which is a large sum which would deter criticism; b) They have also sued Ms. Horsburg with an almost identical statement of claim for a similar amount; c) I draw an adverse inference from [the appellants’] refusal to provide a copy of Ms. Horsburg's contract that the [appellants’] contract with Ms. Horsburg contained a penalty clause of $25,000 for any negative review; and d) [The appellants] did not pursue this action diligently as they waited nearly 22 months after the Post to commence their action.

[21] The motion judge’s focus on the appellants’ apparent actions to silence critics, including the lawsuit involving another client, and their purported lack of diligence in pursuing their action was misplaced and contrary to the Supreme Court’s guidance in Pointes. As Nordheimer J.A. stated in Levant v. DeMelle, 2022 ONCA 79, at para. 80, leave to appeal requested, [2022] S.C.C.A. No. 88, the indicia of a SLAPP lawsuit may be relevant in the consideration of costs and the appropriateness exception under s. 137.1(8). In this case, however, the motion judge’s consideration of those factors amounted to a distraction from the relevant issues that had to be decided on the merits of the motion.

(b) The motion judge failed to consider reputational harm

[22] The motion judge’s harm analysis was incomplete and did not take into account reputational harm. He concluded, at para. 58, that the appellants “have not met their onus to show that they have suffered any harm from [the respondent’s] expression in her Post” primarily because they failed to show actual damages and that, as a result, “any damages awarded to them in their defamation action would be nominal in any event.”

[23] The motion judge’s approach reveals reversible error. In determining whether the alleged harm was sufficiently serious, the motion judge focused only on the monetary harm pleaded by the appellants and failed to consider the reputational harm to the appellants’ professional reputations. As I earlier indicated, the harm analysis did not require the appellants to definitively quantify or prove their actual damages on this threshold motion, particularly because this case involves alleged reputational damages caused by very serious allegations of fraud. The motion judge failed to acknowledge that general damages for defamation do not have to be proven and, importantly, that the respondent’s very serious allegations of fraud were potentially very harmful to the appellants’ professional reputations.

[24] In Platnick, at para. 146, Côté J. emphasized that “reputational harm is eminently relevant to the harm inquiry under s. 137.1(4)(b)” and that the Supreme Court’s jurisprudence “has repeatedly emphasized the weighty importance that reputation ought to be given”, because “reputation is one of the most valuable assets a person or a business can possess”: see also Pointes, at para. 69. Moreover, she noted, at para. 147, that the “import of reputation is only amplified when one considers professional reputation.” As a result, she concluded, the harm analysis requires the consideration of not only the pleaded monetary harm, but also the harm to a plaintiff’s reputation, “even if not quantifiable at this stage”, noting that “the damaging effects that a defamatory remark may have on a plaintiff’s position and standing in the professional community exacerbate the harm suffered as a result”: Platnick, at para. 148; Pointes, at para. 71.

[25] While acknowledging that the respondent’s expression of opinion was “defamatory” and “inappropriate”, the motion judge failed to undertake the requisite analysis of reputational harm in his harm inquiry. He focussed only on the monetization of the appellants’ damages and failed to examine the potential damaging effects, even if not quantifiable at this threshold stage, to the appellants’ professional reputations caused by the respondent’s very serious allegations of fraud.

[26] The nature of some defamatory allegations is so damaging that the likelihood of serious harm to a person’s reputation can be inferred: Lascaris v. B’nai Brith Canada, 2019 ONCA 163, 144 O.R. (3d) 211, at para. 41 [2], leave to appeal refused, [2019] S.C.C.A. No. 147; Canadian Union of Postal Workers v. B’nai Brith Canada, 2021 ONCA 529, 460 D.L.R. (4th) 245, at para. 39. I am not persuaded by the respondent’s submissions that the inference of reputational harm should be limited to the worst allegations, such as terrorism or pedophilia. Calling individuals “scammers” and “fraudsters” who take money without starting or completing work is clearly damaging to the appellants’ professional reputations as construction professionals.

(c) The motion judge failed to determine the qualitative value of the respondent’s expression

[27] Finally, the motion judge failed to complete the weighing exercise, which required him to examine whether the respondent’s expression was qualitatively worthy of protection, including consideration of the respondent’s motive for the expression. His conclusion that the public interest in the respondent’s expression outweighed the public interest in allowing the appellants’ action to continue was therefore flawed because he never qualitatively assessed the public interest in the respondent’s expression under s. 137.1(4)(b). Rather, he erroneously appears to have relied on his finding under s. 137.1(3).

(3) Fresh analysis under s. 137.1(4)(b)

[28] A motion judge’s determination of a s. 137.1 motion will typically be entitled to deference upon appeal, absent reviewable error: Platnick, at para. 77. Here, the motion judge’s determination of the respondent’s motion is not entitled to deference because of the legal, analytical errors that I have just reviewed. As a result, the motion judge’s order must be set aside and the analysis conducted afresh.

[29] I start with the consideration of potential and actual harm as pleaded by the appellants and in their responding evidence advanced on the respondent’s motion. The appellants put forward evidence that they have lost business as a result of the respondent’s expression of opinion. While they have not specifically quantified their losses, they point, as examples, to the loss of clients because of the respondent’s statements on the HomeStar and Reddit websites. The fact that the appellants’ evidence refers to allegedly defamatory statements on HomeStar that are not pleaded, as well as those on Reddit that are pleaded, is of no moment for the purposes of the threshold motion where the appellants must simply put forward some evidence of harm: the respondent’s statements on HomeStar are identical to the impugned statements on Redditt and, according to the appellants, resulted in the loss of clients. Moreover, the damning nature of the respondent’s statements is so obvious that the likelihood of significant harm to the appellants’ professional reputations can be inferred. In my view, the appellants have met their burden of demonstrating on a balance of probabilities the likelihood of significant harm, which is all that is required of them at this threshold stage.

[30] I turn then to a qualitative consideration of the public interest in the respondent’s expression. The vitriolic nature of the respondent’s expression deserves very little protection, if any, as a matter of public interest to consumers of professional construction services. The respondent could have expressed her opinion about the appellants’ services without resort to the extreme and defamatory language that she used. There is a significant difference, on the one hand, between providing others with a descriptive account of the nature and quality of services one has received – including an explanation of the reasons one is dissatisfied – and, on the other hand, calling a contractor a “fraudster” and a “scammer” and calling on others to act in concert to drive the contractor out of business. As the motion judge found, the respondent was motivated by malice to run the appellants out of business.

[31] In weighing the public interest considerations, I am of the view that the public interest in allowing the appellants’ action to proceed because of the potentially significant harm caused to their professional reputations outweighs the minimal public interest in the respondent’s unnecessarily scurrilous and personal attacks against them. I see no chilling effect on future expression of matters of public interest to consumers. Permitting the appellants’ claim for defamation to proceed will not deter others from speaking out; rather, it will encourage others to express themselves in a measured and responsible way.

[32] Following the Supreme Court’s guidance to look at “what is really going on in the particular case”, this is not the type of case that “comes within the legislature’s contemplation of one deserving to be summarily dismissed at an early stage, nor does it come within the language of the statute requiring such a dismissal”: Pointes, at para. 81; Platnick, at para. 172. It is not a case where the appellants are trying to “vindictively or strategically” silence the respondent: Platnick, at para. 172. Rather, it is no more than a private dispute where the appellants appear to be legitimately seeking damages for harm suffered as a result of the respondent’s allegedly defamatory statements, which the respondent denies. The definitive determination of these issues is not up to this court, but to the court that adjudicates the claim on its merits.

Disposition

[33] For these reasons, I would allow the appeal and set aside the costs awarded below. My disposition of this appeal results in the dismissal of the respondent’s cross-appeal to increase the costs award.

[34] The appellants are entitled to their costs of the appeal in the amount of $14,040.

[35] They are also entitled to their costs of the respondent’s motion. In my view, the respondent’s motion was ill-conceived. The appellants’ action is not a SLAAP lawsuit; rather, by their action, the appellants legitimately seek to vindicate their rights against the respondent for the alleged defamation. I would therefore exercise the court’s discretion under s. 137.1(8) to order that the respondent pay the appellants their costs of the motion in the amount of $25,000. Both amounts are inclusive of disbursements and applicable taxes.

Released: December 7, 2022 “P.D.L.” “L.B. Roberts J.A.” “I agree P. Lauwers J.A.” “I agree B.W. Miller J.A.”

Appendix A

For the purposes of this appeal, the relevant provisions of s. 137.1 of the Courts of Justice Act are 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 of 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.

(2) In this section, “expression” means any communication, regardless of whether it is made verbally or non-verbally, whether it is made publicly or privately, and whether or not it is directed at a person or entity.

(3) On motion by a person against whom a proceeding is brought, 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.

(4) A judge shall not dismiss a proceeding under subsection (3) if the responding party 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.

(7) If a judge dismisses a proceeding under this section, the moving party is entitled to costs on the motion and in the proceeding on a full indemnity basis, unless the judge determines that such an award is not appropriate in the circumstances.

(8) If a judge does not dismiss a proceeding under this section, the responding party is not entitled to costs on the motion, unless the judge determines that such an award is appropriate in the circumstances.

[1] The relevant provisions of s. 137.1 for the purposes of this appeal are set out in Appendix A to these reasons.

[2] The respondent argues that the presumption of harm arising from very serious defamatory statements in Lascaris has been overtaken by the recommended analysis from Pointes, relying on para. 51 from Levant. I do not read Levant as rejecting the presumption of harm. Rather, as noted in paras. 51-52, the presumption may but does not have to be restricted in the case of defamation against a corporate entity. The Canadian Union of Postal Workers did not restrict the presumption. Importantly, Côté J. for the majority in Platnick reiterates the “weighty importance” of damage to professional reputation even where not quantifiable: at paras. 146-148.