Mark Roderick McQueen v. Douglas Reid, 2018 ONSC 1662

COURT FILE NO.: CV-15-523007 DATE: 2018-03-09 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Mark Roderick McQueen, Plaintiff AND: Douglas Reid, Defendant

BEFORE: S. Nishikawa COUNSEL: Jonathan Stainsby, for the Plaintiff/Responding Party Charles F. Scott, for the Defendant/Moving Party

HEARD: February 21, 2018

ENDORSEMENT

Overview

[1] The defendant moving party, Douglas Reid, brings this motion to dismiss the action commenced by the plaintiff, Mark McQueen, for libel.

[2] The motion is brought pursuant to s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “Act”). Sections 137.1 to 137.5 of the Act, introduced by the Protection of Public Participation Act, 2015, S.O. 2015 c. 23, are commonly referred to as anti-SLAPP (Strategic Lawsuit Against Public Participation) provisions. These provisions aim to discourage the use of litigation as a means of unduly limiting freedom of expression on matters of public interest: Conservative Party of Ontario v. Karahlios, 2017 ONSC 7696, at para. 35.

[3] Both the Statement of Claim and the Statement of Defence were served before the Protection of Public Participation Act, 2015 received Royal Assent, but the parties do not dispute that s. 137.1 applies to the proceeding.[^1]

[4] As detailed further below, when Defendant’s counsel, Mr. Scott, indicated that he would be moving to dismiss the action under s. 137.1(3) of the Act, Plaintiff’s counsel, Mr. Stainsby, advised him that the plaintiff would no longer be proceeding with the action. As a result, while the plaintiff has continued to oppose the motion to dismiss, this opposition is largely to the defendant’s entitlement to costs under s. 137.1(7) of the Act. Because the entitlement to full indemnity costs does not arise unless the action is dismissed pursuant to s. 137.1(3) of the Act, it is necessary to consider the merits of the motion.

Factual Background

[5] The plaintiff is the former Chair of the Board of the Toronto Port Authority (the “Authority”). He was appointed Chair in August 2007.

[6] The defendant, Dr. Douglas Reid, was a member of the Board of the Authority from August 2006 to August 2009. Dr. Reid is currently an associate professor at the Queen’s University School of Business. His areas of research include the airline industry, and he is a frequent commentator on issues relating to the airline industry, giving over 1000 interviews from 2000 to 2010.

[7] The Authority is a federal public authority organized under the Canada Marine Act, S.C. 1998, c. 10, with responsibility for the Port of Toronto and the Billy Bishop Toronto City Airport on Toronto Island (the “Island Airport”).

[8] The action relates to a statement attributed to the defendant in an article entitled “The Relentless Robert Deluce” that appeared in the February 2015 edition of the Toronto Life magazine. Robert Deluce is the founder, President and Chief Executive Officer of Porter Airlines, which operates mainly out of the Island Airport.

[9] The article was written by Michael Posner, and appeared in both the print and online versions of the magazine. The article is largely a profile of Mr. Deluce, his relationships, and the success of Porter Airlines, including in obtaining favourable decisions in relation to the Island Airport from the Authority. The following statement appeared in the article, and was attributed to the defendant:

“The way Deluce has played the Port Authority is masterful,” says Douglas Reid, a former TPA board member, now teaching at Queen’s School of Business. “He got them to buy a second ferry boat. He got them to build the tunnel. How he gets these things done is nothing short of a miracle. The record of decisions favouring Deluce, without exposing him to costs, raises the question of who’s running the airport. It’s a textbook case of a tenant capturing a landlord.”

[10] The plaintiff commenced the action on February 27, 2015. In the statement of claim, the plaintiff alleges that the above statement was intended and understood to refer to the plaintiff, who was identified in the article as the Chairman of the Board of the Authority.

[11] The plaintiff also commenced an action against Toronto Life. In its May 2015 edition, Toronto Life published the following apology:

The February issue article entitled, “The Relentless Robert Deluce” may have left readers with the wrong impression of Mark McQueen, chair of the Toronto Port Authority. Toronto Life did not mean to cast aspersions on Mark McQueen as a business and community leader. Toronto Life has no evidence to suggest that, in his relationship with Porter Airlines, he has behaved unethically or irresponsibly or lacked business acumen or done anything inconsistent with his fiduciary obligations. In fact, the article only meant to comment on the Toronto Port Authority as a public institution, as it relates to the Toronto City Airport, in the context of an ongoing public debate. We apologize to McQueen if we left readers with any other impression.

[12] The action against Toronto Life was settled on February 1, 2017.

[13] The defendant served a statement of defence on May 23, 2015, and the plaintiff served a reply on August 8, 2016. In late November 2016, Mr. Scott advised Mr. Stainsby that he would be bringing a motion to dismiss the proceeding under s. 137.1(3) of the Act. Mr. Stainsby responded that the plaintiff would not be pursuing the action and offered to dismiss the proceeding on a without costs basis. Mr. Scott advised that the defendant would be seeking full indemnity costs pursuant to s. 137.1(7) of the Act. The parties had further discussions on costs but were unable to resolve the matter. During the course of these discussions, Mr. Stainsby advised Mr. Scott that he would seek leave to discontinue the proceeding, but no further steps were taken.

[14] As a preliminary matter, the plaintiff sought leave to file an additional affidavit, responding to the defendant’s reply affidavit. The defendant opposed, but sought leave to file a further reply affidavit if the defendant’s affidavit were to be admitted. The parties had consented to a timetable for the motion, which was ordered by the court, and which did not provide for additional reply. Given the timetable order, the limited issues before the court, and the fact that the parties had ample opportunity to respond, I declined to grant leave to file the affidavit at the hearing, and have not considered the evidence contained therein in deciding the motion.

Issues

[15] The issues raised in this motion are as follows:

a. Whether the action should be dismissed pursuant to s. 137.1(3) of the Act;

b. Whether the defendant is entitled to full indemnity costs under s. 137.1(7) of the Act;

c. Whether an award of costs on a full indemnity basis is not appropriate in the circumstances; and

d. Whether the defendant is entitled to any damages under s. 137.1(9) of the Act.

Analysis

Dismissal under s. 137.1(3)

Expression in respect of a matter of public interest

[16] The purpose of s. 137.1 of the Act is articulated in s. 137.1(1):

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 on 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.

[17] In order to determine whether an action should be dismissed, the court must first consider whether the communication was in respect of a matter of public interest. In doing so, the court examines the subject matter of the communication “objectively and reasonably” and not the motives of the speaker or writer: Able Translations Ltd. v. Express International Translations Inc., 2016 ONSC 6785, 410 D.L.R. (4th) 380, at para. 25.

[18] In this case, examining the statement objectively and reasonably, the impugned statement was in respect of a matter of public interest. Decisions made by the Authority in relation to the Island Airport were, and remain, of significant interest to the public, as evidenced by frequent controversy and public engagement on these issues. As documented in the defendant’s affidavit, the Authority and the continued development of the Island Airport have been vigorously debated in the media and at the municipal and federal government levels. Moreover, the decisions that were referred to in the statement related to the conduct of a federal public authority and the use of public funds. These are matters of public interest on which public debate is essential to ensuring accountability and transparency.

[19] The defendant has demonstrated that the expression relates in its “pith and substance” to a matter of public interest: Able Translations, at para. 25.

No dismissal under s. 137.1(4)

[20] Once a defendant has demonstrated that the communication was in respect of a matter of public interest, in order to avoid dismissal of its claim, the plaintiff must satisfy the judge, pursuant to s. 137.1(4) of the Act, that

a. there are “grounds to believe” that

(i) the proceeding has substantial merit;

(ii) the defendant has no valid defence in the proceeding; and

b. the harm likely to be or have been suffered as a result of the defendant’s expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression: see Progressive Conservative Party, at para. 48; 1704604 Ontario Ltd. v. Pointes Protection Assn., 2016 ONSC 2884, 84 C.P.C. (7th) 298; United Soils Management Ltd. v. Mohammed, 2017 ONSC 4450, 39 C.C.L.T. (4th) 304, at paras. 18-19.

[21] In Able Translations, Dunphy J. examined the statutory purpose, language and existing test to establish defamation, and concluded at paras. 45-48 that the standard of proof that a plaintiff must meet in demonstrating the first two parts of the test is one of “reasonable grounds to believe.”[^2] Reasonable grounds to believe is “something more than mere suspicion, but less than the standard applicable in civil matters of proof on a balance of probabilities.” There must be an objective basis for the belief, demonstrated with “compelling and credible information”: Able Translations, at para. 46, quoting Mugesera v. Canada (Minister of Citizenship and Immigration), 2005 SCC 40, [2005] 2 S.C.R. 100, at para. 114.

[22] The plaintiff argues that his claim was not motivated by an intent to chill the defendant’s expression or public debate, but rather by a sincere wish to protect his reputation as a business person. Subsection 137.1(3), however, does not require a defendant to demonstrate any such intent in order to be successful on a motion to dismiss. The fact that the plaintiff commenced the proceeding because of a perceived threat to his reputation, as opposed to a desire to stifle debate, does not necessarily mean that the proceeding has substantial merit.

[23] Examining the impugned statement more closely, it is notable that the plaintiff is not specifically named in the defendant’s comments, which focus on the subject matter of the article, Mr. Deluce. The plaintiff argues that the reference to “them” in the impugned statement as opposed to “it”, as would be used to refer to the Authority as an entity, makes clear that the statements are intended to disparage the plaintiff. The use of the plural “they”, however, would seem to imply the board members as a whole, or at the very least, more than one individual in particular. As the paragraph immediately preceding the impugned statement refers to a former CEO of the Authority, it is unclear to whom the statement refers.

[24] In fact, Mr. McQueen is mentioned once in the article, a few paragraphs later, in a statement describing board members of the Authority upon whom Mr. Deluce could “rely”:

At the TPA, Deluce can rely on the support of Jeremy Adams, who was an advisor to former Ontario premier Mike Harris; lawyer Sean Morley, who served as policy advisor to the late Jim Flaherty; Robert Poirier, a veteran Tory fundraiser; and Mark McQueen, TPA’s chair for the past seven years, a Conservative party member and a former staffer in Brian Mulroney’s PMO.

[25] The statement of claim alleges that the statement was calculated to disparage the reputation and character of the plaintiff, and that it would have a negative impact on his business relationships and livelihood. Because the statement refers to the Authority as a whole and the subsequent reference to Mr. McQueen does not refer back to the earlier comment, it is difficult to see how the impugned statement could have been calculated to disparage the plaintiff. I find that the plaintiff has failed to demonstrate, with compelling and credible evidence, reasonable grounds to believe that the proceeding has substantial merit.

[26] The plaintiff must also show grounds to believe that the defendant has no valid defence in the proceeding. The defendant argues that he would have had good defences of truth or fair comment. Specifically, the defendant claims that his statement that Mr. Deluce got the Authority to build a second ferry and tunnel at no cost to Porter Airlines is factually true, or a fair comment on the actions of the Port Authority.

[27] The plaintiff claims that the statement is false, because the Authority did not pay for the second ferry and tunnel. The dispute between the plaintiff and defendant appears to turn on the characterization of the Airport Improvement Fee (“AIF”) paid by passengers to Porter Airlines when they book their tickets. The AIF, which is transmitted to the Authority, is how improvements like the ferry and tunnel were funded. The plaintiff thus claims that the second ferry and tunnel were funded by the travelling public and Porter Airlines through the AIF.

[28] It is not necessary to determine the truth of the statement made by the defendant in respect of the second ferry and tunnel. I need only determine if the plaintiff has demonstrated reasonable grounds to believe that the defendant could not have made out a viable defence. Since the fee is transmitted to the Authority, it is likely accurate to state that the Authority paid for the ferry and tunnel. If this is not factually correct, then it would be a fair comment to characterize the ferry and tunnel as having been built and paid for by the Authority, which has always been responsible for the development of the Island Airport. The fact that the fee was passed on to the travelling public or collected by Porter Airlines does not alter this. Based on the foregoing, the plaintiff has failed to demonstrate grounds to believe that the defendant could not have made out a viable defence.

[29] The plaintiff has failed to fulfill either of the first two elements of the test under s. 137.1(4), and cannot defeat the motion to dismiss. Strictly speaking, it is unnecessary to consider the third element: Niagara Peninsula Conservation Authority 2017, at para. 46. However, I find that the plaintiff has failed to demonstrate that the harm likely to be suffered by the defendant’s expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression. On this motion, the plaintiff has provided no evidence of harm suffered or likely to be suffered that would allow the court to find that such harm outweighs the public interest in protecting the expression: see Fortress Real Developments Inc. v. Rabidoux, 2017 ONSC 167, at para. 36. The public interest in protecting the expression necessarily outweighs any potential harm in this case. Moreover, given that the impugned statement makes no reference to the plaintiff, it would be difficult without any evidence to infer any harm on the basis of the statement alone.

[30] The plaintiff has failed to satisfy any of the three elements identified in s. 137.1 (4) of the Act, and the action must be dismissed.

Whether the defendant is entitled to full indemnity costs

[31] Subsection 137.1(7) of the Act states: “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.” The defendant’s position is that once the court has determined that the action should be dismissed pursuant to s. 137.1(3), the defendant is entitled to full indemnity costs, unless the plaintiff demonstrates that such an award would not be appropriate in the circumstances.

[32] By contrast, the plaintiff argues that costs remain at the discretion of the motions judge and that the defendant is still required to demonstrate that he is entitled to full indemnity costs.

[33] The defendant’s position on the proper interpretation of s. 137.1(7) is supported by the few cases decided under that provision: see Able Transactions, at para. 105; Niagara Peninsula Conservation Authority v. Smith, 2018 ONSC 127, at para. 12. As noted by Ramsay J. in Niagara Peninsula Conservation Authority 2018, at para. 12, “the starting point is full indemnity but I need not order full indemnity if I consider it inappropriate to do so.” It is the plaintiff’s burden to demonstrate that an award of full indemnity costs would be inappropriate in the circumstances.

[34] In this case, the plaintiff has raised as a factor the fact that s. 137.1 was not in force when he commenced the action. This was considered by Dunphy J. in Able Translations, at paras. 106-09, but was found not to warrant a departure from the entitlement to full indemnity costs because, among other reasons, the effective date of the new legislation was widely known.

[35] Moreover, the legislature specifically provided that the section would apply to actions commenced after first reading as opposed to when the bill received Royal Assent. It is therefore evident that the provision, including the cost consequences, were intended to apply to more, rather than fewer, actions, including those brought before the provision entered into force. Exceptions should therefore be limited.

[36] The plaintiff further argues that s. 137.1(7) should not apply where the plaintiff has indicated an intent not to proceed with the action. The plaintiff has also argued that the motion was unnecessary and that the defendant’s counsel should have permitted the plaintiff to proceed with a motion to discontinue and to have the costs of the proceeding assessed pursuant to that process. It was open to the plaintiff to seek leave to discontinue the action at an earlier stage in the proceeding, as plaintiff’s counsel indicated he would do in July 2017, as long as the motion to dismiss had not been made: see s. 137.1(5) of the Act.

[37] While the plaintiff’s communication that he would not be proceeding with the action is a factor to consider, the plaintiff’s subsequent conduct does not reflect reasonable efforts to arrive at a resolution. The defendant was put in the difficult position of either accepting an amount that did not account for the costs incurred in defending the action or continuing with the motion.

[38] The plaintiff has not identified any basis to find that costs on a full indemnity basis would not be appropriate in the circumstances.

[39] Both the plaintiff and defendant claim that, due to the intransigence of the opposing party, they had no choice but to proceed with this motion and to incur the further costs that resulted. The unfortunate consequence is that costs have significantly increased since first discussed.

[40] Mr. Scott has submitted a bill of costs for the motion and proceeding for a total of approximately $100,000. As a sole practitioner, Mr. Scott has performed all of the work in relation to the proceeding, and the costs relate solely to his time on the matter. He has discounted his hourly rate by $200 per hour.

[41] Mr. Stainsby suggests that an amount closer to his bill of costs, approximately $30,000 for the motion on a partial indemnity basis, would be more appropriate.

[42] Both counsel spent more time than might otherwise have been contemplated due to the novelty of s. 137.1 and the absence of case law interpreting it. The defendant could not move to dismiss before filing a statement of defence, since the provision received Royal Assent only after that time. The allegations in the statement of claim were substantial and raised significant factual issues that required a detailed response.

[43] In Niagara Peninsula Conservation Authority 2018, at para. 19, Ramsay J. stated that “‘full indemnity’ means recovery of what would reasonably have been contemplated as the amount a lawyer would actually charge the client.” Defendant’s counsel argues that the amount is not out of line with amounts awarded for full indemnity costs in other cases under this provision: see Niagara Peninsula Conservation Authority 2018, at para. 23.

[44] While I am reluctant to second-guess the hours spent by counsel in defending the action and in bringing the motion, I find the amount somewhat higher than what might reasonably be contemplated, given the level of complexity of the legal issues, the relatively few procedural steps involved, and the plaintiff’s position that he would not be pursuing the action.

[45] Based on the foregoing, I fix the defendant’s costs of the action and this motion on a full indemnity basis at $80,000 all-inclusive, and order the plaintiff to pay this amount within 60 days of the release of this decision.

Damages under s. 137.1(9)

[46] Pursuant to s. 137.1(9) of the Act, if in dismissing a proceeding under this section, the judge finds that the plaintiff brought the proceeding in bad faith or for an improper purpose, the judge may award damages as considered appropriate. The defendant seeks damages in the amount of $2,364.55, paid as interest on a line of credit which he obtained in order to fund his defence.

[47] In order to be entitled to damages under s. 137.1(9), a moving party would have to demonstrate more than a lack of merit. The language used in the provision refers to “bad faith” or “improper purpose”, which I interpret to mean that the defendant must demonstrate that the proceeding was commenced for a purpose that goes beyond an attempt to chill or stifle debate. In addition, s. 137.1(9) does not contain the “grounds to believe” language found in s. 137.1(4), which suggests that proof of bad faith or improper purpose must be established on a balance of probabilities.

[48] The defendant points to the $15 million in damages sought by the plaintiff and suggests that the plaintiff had “an axe to grind” with the defendant about past conflicts when both were members of the Board. The defendant also notes that the plaintiff did not bring proceedings against individuals who have made more objectively disparaging remarks against him. The decision not to pursue the claim early on in the proceeding could also be seen as evidence of an improper purpose, but the plaintiff’s evidence is that this decision was based on the apology issued by Toronto Life. While I have found that the plaintiff failed to demonstrate grounds to believe that the proceeding has substantial merit, there is little evidence to suggest that the proceeding was commenced in bad faith or for an improper purpose.

[49] Based on the affidavit evidence before me, I find that the defendant has failed to demonstrate bad faith or improper purpose, and decline to award the defendant damages under s. 137.1(9) of the Act.

S. Nishikawa J.

Date: March 9, 2018

[^1]: The Protection of Public Participation Act 2015 received Royal Assent on November 3, 2015, but provided that it would apply to proceedings commenced on or after the date of first reading, which took place on December 1, 2014: see s. 137.5 of the Act.

[^2]: See also Niagara Peninsula Conservation Authority v. Smith, 2017 ONSC 6973, at para. 45. In McLaughlin v. Maynard, 2017 ONSC 6820, at para. 15, Hurley J. applied the civil standard of proof on a balance of probabilities. As I have found that the plaintiff has not met the lower standard of reasonable grounds to believe, the plaintiff would also fail to meet the higher standard of proof on a balance of probabilities.