Accruent LLC v. Mishimagi, 2016 ONSC 6924

CITATION: Accruent LLC v. Mishimagi, 2016 ONSC 6924

COURT FILE NO.: CV-16-547718

DATE: 2016-11-08

SUPERIOR COURT OF JUSTICE – ONTARIO

BETWEEN:

ACCRUENT LLC, VFA INC. and VFA CANADA CORP.

Plaintiffs (Defendants to the Counterclaim)

-and-

TOMOYUKI MISHIMAGI and SARON GEBRESELLASSI

Defendants (Plaintiffs by Counterclaim)

BEFORE: F.L. Myers J.

COUNSEL:

Jordan Goldblatt, for the Defendant (Plaintiff by Counterclaim), Saron Gebresellassi

Tudor Carsten, Ryan D. Campobell, and Jennifer P. Saville for the Plaintiffs (Defendants by Counterclaim)

READ: November 7, 2016

ENDORSEMENT

[1] By endorsement dated October 24, 2016, the court dismissed a motion by the defendant Gebresellassi to dismiss this action under s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c.C.43 as amended. That section is commonly referred to as an anti-SLAPP law or a law designed to prevent a “strategic lawsuit against public participation.” The law is designed to prevent people from using the threat of expensive lawsuits to dissuade others from expressing themselves on matters of public interest. Here, the defendant claimed that the plaintiff’s defamation claim against her arose “from an expression made … that relates to a matter of public interest” as set out in s. 137.1(3) of the statute. She asked to have the lawsuit dismissed. Applying the definition of public interest from cases such as Grant v Torstar Corp., 2009 SCC 61 the Court dismissed the motion.

[2] The successful plaintiff seeks costs on a partial indemnity basis of $43,641.16 on the basis that it was fully successful on the motion. There is a significant evidentiary burden on a plaintiff faced with an anti-SLAPP motion. Therefore, the plaintiff analogizes to summary judgment motions to provide a fair sense of a reasonable quantum of costs.

[3] The unsuccessful defendant points to ss. 137.1(7) and (8) of the statute that provide as follows:

Costs on dismissal

(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.

Costs if motion to dismiss denied

(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.

[4] By providing presumptive entitlement of a successful defendant to full indemnity for her costs and presumptive entitlement of a successful plaintiff to no costs award, the Legislature is signaling its intent to encourage and make anti-SLAPP motions accessible to defendants. That is, where a lawsuit is an effort to suppress public participation by the threat of causing the defendant to incur financially crippling costs and damages, the Legislature has provided a low cost mechanism for a defendant to try to end the proceeding very quickly. Moreover, the fact that s. 137.1(8) reverses the normal presumption that costs go to the winner, shows that the Legislature is encouraging motions to fend off SLAPP suits. An unsuccessful defendant may still be found liable for costs. But the court is required to make a specific finding that a costs award is appropriate in all of the circumstances.

[5] I find that this is not a case for costs. While the plaintiff was fully successful and the court was critical of the defendant’s conduct in publishing the press release that is the subject of the plaintiff’s defamation claim, there is another side to the story. In dismissing the motion, the court also found that the plaintiff’s claim for damages appears to be weak at best. General damages are presumptively modest for a corporation at the best of times. The plaintiff was not able to establish on the motion that it suffered any significant special damages. Moreover its efforts to do prove damages exposed a fundamentally weak position on the issue.

[6] The fact that a plaintiff has not suffered much, if any, real loss as a result of allegedly defamatory words should be good news for the plaintiff. One questions then why the plaintiff is incurring the cost and effort of suing if it has not really been damaged in a material way.

[7] Had the matter involved an issue of public interest, the weakness of the damages claim may well have led to the dismissal of the action under the balancing test provided in s. 137.1(4)(b) of the statute. Moreover, the plaintiff’s settlement demand, that the defendant not make any future public statements against it in a disparaging way “or otherwise” and its refusal to limit the provision to prohibit just disparaging statements shows that it is using the lawsuit for a purpose beyond that which is available under the law of defamation. The law of defamation does not prevent a defendant from ever saying the plaintiff’s name provided that she does not further defame the plaintiff. Here, it appears that the plaintiff has brought a weak claim and used the threat of the costs and embarrassment to try to extract something from the defendant that the law of defamation does not otherwise provide – a gag order. In my view, while not affecting a matter of public interest, this strategic use of the lawsuit in this case offsets the plaintiff’s success and leaves it with little equity on its side of the costs ledger. There is no basis therefore to overcome the presumption that there should be no costs provided for under s. 137.1(8).

[8] Even without s. 137.1(8), the fixing of costs is a discretionary decision under section 131 of the Courts of Justice Act. That discretion is generally to be exercised in accordance with the factors listed in Rule 57.01 of the Rules of Civil Procedure. These include the principle of indemnity for the successful party (57.01(1)(0.a)), the expectations of the unsuccessful party (57.01(1)(0.b)), the amount claimed and recovered (57.01(1)(a)), and the complexity of the issues (57.01(1)(c)). Overall, the court is required to consider what is “fair and reasonable” in fixing costs, and is to do so with a view to balancing compensation of the successful party with the goal of fostering access to justice: Boucher v Public Accountants Council (Ontario), 2004 14579 (ON CA), (2004), 71 O.R. (3d) 291, at paras 26, 37.

[9] In my view, in the circumstances there should be no costs. Both parties are engaging in strategic behaviour against the other. Both have taken proceedings (the press release and consequently this lawsuit) designed to put tactical pressure on the other with little thought to the underlying merit or lack of merit of their acts. I would not exercise my discretion to reward either in costs.

F.L. Myers J.

Date: November 8, 2016