Court File and Parties

COURT FILE NO.: CV-17-574024 DATE: 20190725

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

KENAIDAN CONTRACTING LTD. Plaintiff/Responding Party

-and-

LANCASTER GROUP INC., GREG CRAWFORD, AND BLAIR HUBBER Defendants/Moving Parties

COUNSEL: Robert B. Cohen and Graham Brown, for the Plaintiff Melissa Seal and Jennifer Ng, for the Defendants

HEARD: June 21, 2019

BEFORE: Leiper, J.

REASONS FOR DECISION

I. INTRODUCTION

“Anti-SLAPP” Legislation

[1] In November of 2015, Ontario passed legislation to protect public interest expression from “strategic lawsuits against public participation” (SLAPP). These provisions are found in sections 137.1 to 137.5 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (CJA).

[2] Anti-SLAPP legislation responds to the potentially chilling effect on public discourse where lawsuits are used to silence or financially punish one’s critics. Defamation lawsuits in particular have been used in this way: 1704604 Ontario Ltd v. Pointes Protection Association, 2018 ONCA 685, at paras 2-3, leave to appeal granted, [2018] S.C.C.A. No. 467. Section 137.1 is a legislative mechanism to dismiss lawsuits that are brought to “silence, intimidate and punish” those who speak out on matters of public interest, thus protecting free speech in a democratic society: Pointes, supra at para 2. This legislation is intended to balance the harm from defamatory speech with a broad, but not unlimited, interest in protecting public interest expression, even where that speech may be defamatory in law.

The Plaintiff’s Defamation Claim and the s. 137.1 Motion by the Defendants

[3] The plaintiff, Kenaidan, issued a claim seeking $15 million in damages for defamation from the defendants, Lancaster Group Inc. (Lancaster), Greg Crawford and Blair Hubber (the Lancaster Officers).

[4] Kenaidan claims it was defamed by an open letter that the Lancaster Officers sent to the City of Hamilton (the City) on March 13, 2017. The letter included statements that Kenaidan had mismanaged a construction project, failed to pay $4 million in unpaid invoices to Lancaster and failed to communicate or provide a defence as to why the amounts remained outstanding. Kenaidan also alleged defamation as a result of media interviews provided by the Lancaster Officers after the letter was sent to the City.

[5] The backdrop to the claim was the construction of facilities for the Pan Am Games in Ontario between 2013 and 2015. Lancaster was a subcontractor to a joint venture (the JV) that involved Kenaidan and a French-based company, Bouygues Building Canada. In 2015, Lancaster registered liens on three Pan Am Games project sites and began litigation for claims of unpaid services by the JV.

[6] The defendants have moved to dismiss Kenaidan’s defamation claim pursuant to section 137.1 of the CJA. These are the reasons for allowing the motion. The starting point for the analysis is the nature of the provisions and their purpose.

II. SECTION 137.1 OF THE COURTS OF JUSTICE ACT: PURPOSE AND PROVISIONS

[7] Section 137.1(1) states the purpose of Ontario’s anti-SLAPP provisions:

(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.

[8] To establish that a claim should be dismissed under the anti-SLAPP provisions, a defendant must first establish whether the proceeding arises from an expression that relates to a matter of public interest.

[9] “Expression” is defined in s. 137.1(2) as “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.”

[10] The phrase, “a matter of public interest,” is not defined in the CJA. Its meaning in s. 137.1(3) is often taken from the analysis used in Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640: e.g. Pointes, supra at para 66; New Dermamed v. Danna Sulaiman and Google Inc., 2019 ONCA 141 at para 7; Platnick v. Bent, 2018 ONCA 687 at para 35.

[11] Public interest is determined by reviewing the entire expression and its context. Grant v. Torstar, supra at para 105 provides a useful question: is the subject matter “one inviting public attention, or about which the public has some substantial concern because it affects the welfare of citizens, or one to which considerable public notoriety or controversy has attached?”

[12] The public has a “genuine stake” in knowing about many matters, from science to the arts, morality and religion. The range of available topics stem from a democratic interest in wide-ranging public debate: Grant v. Torstar Corp, supra at paras 105-106, cited in New Dermamed, supra at para 7. At this stage, neither the merits, manner of the expression, nor the motives of the author are considered: Pointes, supra at para 65.

[13] Some topics have been found to be obvious matters of public interest. For example, the conduct of governmental affairs and the operation of the courts are matters of public interest: Pointes, supra at para 59. Procurement and the expenditure of public funds are other undisputed examples: Bondfield Construction Co. v. The Globe and Mail, 2019 ONCA 166 at para 7.

[14] If the defendant establishes that the expression relates to a matter of public interest, the judge shall dismiss the proceeding, subject to the provisions in 137.1(4). These provisions shift the onus to the plaintiff who must establish:

(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 proceedings to continue outweighs the public interest in protecting that expression.

These aspects of the legislation have been considered in a number of decisions from the Court of Appeal for Ontario, discussed below in the analysis sections. First, however, the factual context for the dispute needs to be described.

III. BACKGROUND AND CONTEXT

The Hamilton Stadium Project

[15] In preparation for the 2015 Pan Am Games soccer competition, the former Ivor Wynne stadium in Hamilton, Ontario was slated to be replaced and renamed Tim Hortons Field. The construction was organized according to an “alternative financing and procurement” arrangement. Infrastructure Ontario contracted with a private entity, known as Ontario Sports Solutions or “ONSS,” which in turn contracted the design-build obligations to the Kenaidan/Bouygues JV. The JV subcontracted work on the project to other service suppliers, including Lancaster. Construction began in May of 2013.

[16] Lancaster is a Hamilton-based contractor which provides sheet metal, HVAC and mechanical services for industrial, commercial, institutional and residential clients. Lancaster received subcontracts from the JV on three Pan Am Games construction sites: the Hamilton stadium, a velodrome built in Milton and a stadium built at York University in Toronto.

[17] The City had a separate facilities agreement with Infrastructure Ontario (IO). The City was not a party to the IO construction contracts with the JV project companies. The City contributed $54.3 million to the cost of building the stadium with the balance of funding coming from the Ontario provincial government and the federal government.

The Hamilton Stadium Project Delays

[18] The Hamilton stadium project fell behind schedule. According to a September 12, 2014 Globe and Mail article, “only a rush of last-minute work allowed part of the stadium to open Sept. 2 for a Tiger-Cats game against the Toronto Argonauts.” The article included comments from construction trades union representatives who described a major miscalculation which contributed to the delay: the stadium had not been designed to support its 24,000-person capacity. Those quoted for the article stated that this led to poor construction scheduling by the builder and increased labour, design and materials costs. Officials with the City and IO both said that the JV, not the taxpayers, should pay for the cost of the mistake. JV officials blamed a severe winter, a masonry subcontractor going into receivership and the length of time it took for the City to issue building permits.

[19] In cross-examination on his affidavit, the President and Chief Operating Officer of Kenaidan, Mr. Kirkland agreed with the reasons for the delay that the JV had given in the Globe article. He did not agree with the allegations made by the union representatives but he acknowledged that Kenaidan had not sought a retraction for those comments.

[20] On March 8, 2015 the Toronto Star reported on construction liens which were registered by subcontractors on the Hamilton Stadium project. The article noted this was the “latest controversy surrounding the stadium, which has been dogged by delays.” The article identified four subcontractors with liens, including Lancaster. Kenaidan declined to speak with the Toronto Star about the liens and directed questions to IO. IO commented that it is the “general contractor’s responsibility to ensure their subcontractors are paid.” IO described the protection afforded to contractors by placing bonds against liens to ensure the building occupancy process could continue and to protect the taxpayer.

[21] Kenaidan acknowledged that it was aware of the construction liens filed by Lancaster and other subcontractors.

[22] In that same article, one of the subcontractor spokespersons (not Lancaster) said that in his opinion a much larger entity (the JV) was taking advantage of the sub-trades. The leader of the NDP party, Andrea Horwath commented on construction payments, noting that the government could bring in prompt payment legislation to cover situations like this. She was quoted, “Overall-not this specific project-the problem with prompt payment and the release of funds has come up over and over again.”

[23] The Hamilton stadium project was completed approximately 11 months later than required, just in time for the 2015 Pan Am Games. In a Canadian Broadcasting Corporation (CBC) report posted on May 9, 2015 a spokesperson for IO stated, “Regrettably, the delays experienced during construction do not meet the high standards we set for the companies that want to be part of Ontario’s infrastructure program.” In that report, the JV again gave several reasons for the construction delays, including harsh winter weather in 2013 and the bankruptcy of a subcontractor. The CBC report noted that the delays caused the Hamilton Tiger-Cats to play the majority of their season at McMaster University. At one stage, the Mayor of Hamilton wrote to the Premier to warn that the Pan Am Games in Hamilton were in “jeopardy.”

[24] In a Globe article of July 3, 2015, the builders gave the following reasons for the delay: an unexpectedly harsh winter, a faulty caulking job in the stands that caused leaks, and miscalculation of the materials needed to support the weight of 24,000 spectators requiring major changes in the middle of the build.

[25] In contrast, in the affidavit filed on this motion, Mr. Kirkland stated that the delays in the Hamilton stadium project arose from factors beyond its control, including severe weather, the receivership of another subcontractor and delayed work done by Lancaster.

The Lancaster Construction Litigation

[26] Through 2015, Lancaster registered three claims for lien against lands and premises related to the Hamilton stadium and the other Pan Am properties on which it had worked for the JV.

[27] Lancaster commenced actions to perfect its claims for lien and non-lienable claims for amounts owing as a result of project delays. Lancaster named Kenaidan and the other JV partner in this litigation. On July 17, 2015 CBC reported on the litigation including the Lancaster allegations:

• the project was mismanaged from the outset;
• major defects to the structural steel of the stadium drove up costs and delayed completion;
• Lancaster claims it is owed for work done, damages caused by delays and premium wages paid for weekend and night work required to complete the stadium;
• access to the stadium was problematic with failure to coordinate access to the material elevator for the sub-trades.

The CBC article noted that Lancaster’s claim contained allegations that have not been proven in court and no statements of defence had been filed.

[28] In 2015-2016, there were meetings between the JV and Lancaster. Kenaidan made payments of $1.3 million to Lancaster. It asserted that no further amounts were owed to Lancaster. The litigation continued. Lancaster consolidated its construction litigation in the three jurisdictions. Lancaster provided the JV an indulgence in delivering its statements of defence, pending the procedural steps to consolidate the litigation. The indulgence was in effect at the time of the March 13, 2017 letter from Lancaster to the City of Hamilton thus there was not yet a statement of defence filed.

[29] In 2017, Lancaster finalized amendments to its Statements of Claim and obtained consolidation orders. Lancaster claimed a combination of lienable and non-lienable amounts from the JV as follows:

• Hamilton: $613,734.01
• $2,006,947.67
• Milton: $168,377.65
• $1,658,376.49
• Toronto: $103,238.00
• $595,580.53

TOTAL: $5,146,254.35

[30] The owners then delivered their Statements of Defences. The JV pleaded that no further money was owed to Lancaster because of the project delays and Lancaster’s breach of its duties to the JV by causing or contributing to the delays on the Hamilton stadium project.

The City of Hamilton Proceedings against the JV in 2016

[31] As a result of the late delivery of the stadium, the City of Hamilton sued the JV and other entities for lost revenues at the stadium. Both the City and the Hamilton Tiger-Cats issued notices of action in 2016 to preserve all rights related to the construction of the stadium. According to a CBC story of April 30, 2016, the City’s notice of action sought damages of $35 million for breach of contract, negligence and misrepresentation concerning the planning, procurement, design, construction, project management and other aspects of the stadium. The evidence on the motion from Kenaidan officials acknowledged that the delays were a part of the City’s lawsuit.

[32] The CBC article also noted that Lancaster had claimed in its lawsuit filed in 2015 that the project was mismanaged from the outset and that major defects to the structural steel of the stadium drove up costs and delayed completion.

Kenaidan Appears Before the Audit, Finance and Administration Committee

[33] On March 6, 2017, one week prior to Lancaster sending the impugned letter to the City, Mr. Kirkland appeared before the Audit, Finance and Administration Committee of the City of Hamilton to make a statement concerning Kenaidan and the Hamilton stadium project.

[34] Mr. Kirkland’s speaking notes formed part of the record of this motion. The first set of points discussed the litigation with the City:

• the City had issued a notice of action and Kenaidan was a named defendant along with others;
• the notice was issued to preserve rights under a limitation period;
• contract settlement negotiations were ongoing and there was no requirement to defend the actions;
• “At this time, all issues have been settled, and final documentation is being prepared;” and
• This has been done without litigation, other than the original preservation of rights.

[35] The speaking notes next addressed Kenaidan’s commercial relationship with the City of Hamilton. The notes included an apology from Kenaidan to the City and a recognition that its usual reputation in the industry had been affected. The notes included these assertions:

• Kenaidan was the minority local partner on the JV;
• When the construction fell behind schedule, Kenaidan assigned additional staff and crews to move the construction forward;
• Kenaidan had staff on site during close out and warranty period to address open issues;
• Kenaidan has a strong reputation for working cooperatively;
• Kenaidan has never failed to complete a project-it always finishes what it starts;
• the Hamilton stadium project was “very frustrating and distressing for many reasons, not the least of which was the damage to our reputation with the City”;
• On the Hamilton stadium project, Kenaidan “failed to meet the needs of the City of Hamilton, disappointing the City and ourselves;”
• “We are indeed extremely sorry that Kenaidan did not meet the expectations of the City for the construction of the stadium and acknowledge your disappointment with our services on this particular project;”
• The stadium project is not representative of our capabilities as a contractor and we would ask that this committee allow us to continue bidding Hamilton work, so that we demonstrate the strengths that we do have as a contractor, and repair our reputation with the City;
• Kenaidan listed other large projects that it had successfully completed in Hamilton;
• Kenaidan noted their work on a project to give back to the community;
• “We are not aware of any other acts or omissions on the part of Kenaidan which adversely impact our commercial relationship with the City”; and
• the President of Kenaidan ended with his personal commitment on future projects such that issues that occurred at the stadium will not be repeated.

[Emphasis added]

[36] Kenaidan’s principal David Kirkland stated in his affidavit that Kenaidan made this apology believing that Lancaster’s actions had been one of the primary reasons the stadium was delivered late by the JV.

[37] However, Mr. Kirkland agreed on cross-examination that he did not tell City council that Kenaidan was apologizing for delays that were Lancaster’s fault. He went on:

Well, there was other contractors, subcontractors, that would have contributed to the delay, but the point was that Kenaidan was apologizing. I was apologizing on behalf of Kenaidan as the general contractor.

[38] Also in his cross-examination, Mr. Kirkland agreed that although not written in his speaking notes, he had told City Council the following about the delays in the construction:

It injured our reputation. It’s something we regret and we will regret for a long time.

[39] Mr. Kirkland agreed that he told City Council that:

We could have focused on the design of the construction earlier in the piece…more emphasis on the design would certainly have assisted.

Mr. Kirkland said that more emphasis on design would have accelerated the schedule and agreed that the design aspect was something Kenaidan assumed responsibility for on behalf of the JV.

The City Imposes a Two Year Ban on Kenaidan Tendering for City Work

[40] On March 8, 2017, City Council of the City of Hamilton voted to impose a two year moratorium on Kenaidan’s ability to bid on any municipally-owned projects in Hamilton. The minutes of the meeting read:

(a) That due to the impairment of the commercial relationship between the City of Hamilton and Kenaidan Contracting Ltd. (“Kenaidan”) that has resulted from litigation and from Kenaidan’s acts or omissions, staff be directed to reject any current and future Bids, as defined in the Procurement Policy By-law, received from Kenaidan or any of its related corporate or individual entities, including any joint venture to which Kenaidan is a party, until and including March 7, 2019. (b) That the City of Hamilton not enter into any contract with Kenaidan, or any of its related corporate or individual entities, including any joint venture to which Kenaidan is a party, until and including March 7, 2019; (c) That the contents of Report [identifiers omitted] remain confidential.

[41] Kenaidan’s apology and the two-year bidding ban imposed by the City were covered by local press. A Hamilton Spectator article published March 9, 2017, described Kenaidan as the “beleaguered stadium builder.” The project was said to have been subject to “infamous delays and ongoing deficiencies.” One Councillor commented after the vote to ban Kenaidan, “The entire stadium saga, the delays, the deficiencies – some of which have been safety-related—all of that has just been terrible for everybody.” Kenaidan could not be reached for comment on this article.

[42] Kenaidan was described in the article as a “large construction player in the GTA and has worked on Hamilton’s GO station as well as other Metrolinx projects.” The article referred to a prior statement by Mr. Kirkland that the company understood that a settlement of the outstanding lawsuit with the City was “all-but-ready” to be signed. The article asserted that the province, the City, the Ticats and the builder were negotiating over who would pay and the amounts to be paid for the stadium deficiencies and the late penalties.

Lancaster Writes the Open Letter to the City

[43] On March 13, 2017, Lancaster wrote the impugned open letter to the City of Hamilton along with a “backgrounder.” These documents were made also available to various media outlets.

[44] The letter was addressed to the Mayor, Councillors, City Manager, Director, Facilities Management and Capital Programs. It read as follows:

We are writing on behalf of the Lancaster Group Inc., to express serious concerns with the imminent resolution of the City of Hamilton’s legal dispute involving Kenaidan, one of the partners in the construction of Tim Hortons Field. We were a local subcontractor to Kenaidan on the project, who 20 months after completion of our contract still has outstanding invoices totaling $4M. This is despite the fact Lancaster performed above and beyond our obligations, enabling Ontario Sports Solution (ONSS) to complete the project.

At a recent City of Hamilton council meeting, Kenaidan took shared responsibility for the stadium delays and asked the city for a second chance on future tenders. It is our understanding that some councilors are sympathetic to this apology and have committed, after a two-year moratorium, to consider Kenaidan for future projects under the city’s ownership and direction. But how can the residents of this city accept Kenaidan’s apology or consider it for future projects when it has yet to pay outstanding payables to local companies who completed the job despite the incompetence of the general contractor?

We feel it is the City of Hamilton’s duty to stand up for local Hamilton-based companies who have been gravely impacted by Kenaidan’s/ONSS’s mismanagement of the Tim Hortons Field project and its ongoing failure to settle accounts.

The Lancaster Group, a Hamilton-based company founded in 1955, was the HVAC subcontractor of ONSS-a joint venture partnership between Canada-based Kenaidan and France-based Bouygues-on the construction of Tim Hortons Field. Additionally, Lancaster also provided HVAC solutions to ONSS on their Milton Velodrome and York Stadium Pan-Am projects. While Lancaster completed its work within the timelines given by ONSS and was acknowledged as not contributing to the delays at Tim Hortons Field, it has outstanding payments of approximately $4 million. We have sued the Kenaidan Bouygues JV for these unpaid invoices before the Ontario Superior Court of Justice.

Lancaster made a significant financial investment to support ONSS in its goal of meeting critical deadlines at Tim Hortons Field and the other projects. We made this financial decision based on the assumption that our invoices would be paid on a timely basis, in accordance with our ONSS contract. While the outstanding error may only be a rounding error for the likes of Kenaidan and Bouygues, it is significant to us. The lack of payment impacted our ability to properly service our other customers and made us question our ability to support the construction plans at all three sites, as the amount of capital supporting ONSS was significantly disproportionate to our other customers’ requirements. Nonetheless, Lancaster delivered on our commitments at Tim Hortons Field with the expectation that the financial accounts would be resolved. They have not been.

As a result, our cash flow has been strained, which impacted our ability to hire workers, many of whom live and work in the Hamilton community. It has strained our relationships with suppliers, including many local Hamilton-based companies. It has hindered our ability to expand and has impacted our reputation, despite the fact that we had no role in the mismanagement of the project or any responsibility for the delays.

The Lancaster Group is a recognized leader in the local construction industry. We are proud of our former executives who have been inducted into the Hamilton-Halton Construction Hall of Fame. As the city puts aside its own legal claims with ONSS, Kenaidan and Bouygues and looks to future contracts with these companies or their affiliates, we urge you to keep in mind the challenges faced by Lancaster Group. All we are asking for is fair payment for the good work we completed at Tim Hortons Field and the other Pan Am projects.

[45] A three page “backgrounder” attached to the letter provided additional information and dates for the events described in the letter. The backgrounder consisted of an Executive Summary, a timeline with key dates, and a list of contracting faults of the ONSS with three headings:

• Poor project planning and coordination
• Ongoing Payment problems
• Lack of Communication

The last page of the backgrounder discussed the impact on Lancaster, its commitment to the Pan Am projects and its history as a Hamilton-based contractor.

[46] In cross-examination on his affidavit, the President of Lancaster, Greg Crawford stated that he did not draft or fact-check the “backgrounder” that accompanied the letter, and that it was written by other parties. He said he agreed with the contents and believed that its contents were already matters of public knowledge. Mr. Crawford said that he had no comment on the ban and that it was between the City and Kenaidan. He said that the letter was not intended to affect the City’s decision to ban Kenaidan from bidding on municipal contracts for two years.

[47] Mr. Crawford agreed that the letter was sent to assist Lancaster in resolving its litigation with the JV and by reminding Kenaidan that it had not discussed the issues with them. He agreed that the letter was sent to get Kenaidan’s attention. He agreed that he used the word “incompetent” to describe Kenaidan and that it was his opinion.

The Press Coverage of the Lancaster Letter

[48] Lancaster President Greg Crawford commented on Lancaster’s claim against Kenaidan. Mr. Crawford commented to CHCH TV that Lancaster was owed $4 million including amounts for the “base contract, holdbacks and overages for extended time.” He said that because the City appeared about to settle with Kenaidan, Lancaster “want(s) to put our hand up and say, not all items have been addressed. Lancaster is still out significant sums of money and we are still feeling the pain.” A City Councillor was quoted as saying that although City Council cannot solve the legal dispute, it is important to understand how companies interact with the City of Hamilton and local business. Kenaidan also commented in the article, asserting that Lancaster had been paid in full.

[49] On March 15, 2017, Mr. Crawford was interviewed by CBC and repeated his assertion that Kenaidan owed Lancaster $4 million for work finished more than 20 months ago on three Pan Am (Games) projects. The CBC article also quoted from the Lancaster letter. Kenaidan again denied owing additional funds to Lancaster and noted that the claim had not been proved in court. In cross-examination, Mr. Crawford conceded that Lancaster did not assert it had any obligation to inform the media of the letter to the City.

[50] On March 15, 2017, the Lancaster Officers were interviewed by the Spectator. The public letter was again referenced: Mr. Crawford was quoted as saying it was “infuriating” to hear of a settlement among the other parties over blame for the late stadium costs, when “there is still a local subcontractor with money owed and facing financial strain as a result.” In that article Kenaidan asserted that the JV had paid Lancaster in full for its work. It said that Lancaster had failed to prove their claims and the matter was the subject of a court action.

Kenaidan Initiates Defamation Proceedings against Lancaster and the Lancaster Officers

[51] On March 24, 2017, Kenaidan delivered a notice of libel to Lancaster.

[52] On April 28, 2017, Kenaidan issued a statement of claim against Lancaster and the Lancaster Officers. The claim sought general damages of $10 million, special damages of $5 million, punitive damages in the amount of $250,000 thousand, a public apology and interim, interlocutory and permanent injunctions preventing Lancaster and the Lancaster Officers from making defamatory statements.

[53] By Notice of Motion dated October 27, 2017, Lancaster and the Lancaster Officers gave notice of this motion to dismiss pursuant to section 137.1 of the CJA.

IV. THE APPLICATION OF SECTION 137.1 TO THE MOTION

The Threshold Question: Were the Statements Made in the Public Interest? (s. 137.1(3))

[54] The threshold question that the defendants must satisfy on a balance of probabilities is: Do the proceedings arise from an expression by the defendants that relates to a matter of public interest?

[55] Kenaidan argues that the defendants have not satisfied the threshold question, because the expression is related to a private contractual dispute. It points to Mr. Crawford’s admissions that Lancaster’s comments were motivated by its desire to have its accounts paid and the admission that the comments were not intended to be a part of the public debate on the two year ban imposed by the City on Kenaidan.

[56] Kenaidan also argues that any public interest in discussing the stadium delays was over at the time of the Lancaster letter. This was because the City had made its decision to ban Kenaidan from future tendering for two years and Kenaidan’s litigation with the City was virtually settled, subject to completing certain paperwork. Kenaidan argues that a “line should be drawn” prior to the sending of the Lancaster letter as to the public interest in its contents.

[57] I have applied the principles from Grant v. Torstar to these facts and conclude that, looking at the expressions as a whole in the context of the public attention to the issues around the Pan Am Games build, the expression was related to a matter of public interest. The expression was another aspect to the ongoing public narrative about the problems with a publicly-funded sports stadium project. The delays, the reasons for the delays, the design issues, the costs and the various pieces of litigation, including that instituted by Lancaster, were demonstrable matters of public concern during the three-year period leading up to the Lancaster letter. The media reports during that period include comment from members of the construction industry, representatives from the JV, Infrastructure Ontario and public officials on not only the delays but also the prompt payment issues raised by construction liens registered on the Pan Am Games sites.

[58] Further, Lancaster’s letter, the accompanying backgrounder, and the comments provided to the media came within a week of the bidding ban sanction imposed on Kenaidan for its “acts or omissions.” Lancaster’s comments included concerns with the management of a publicly-funded infrastructure project for a high profile international athletic event. The letter described the status of its litigation and expressed concern about the imminent settlement of the litigation involving the City of Hamilton and the JV, when it believed its own litigation was not being settled.

[59] Lancaster’s letter, and the media interviews involving the Lancaster Officers, repeated its desire to obtain payment of its accounts. These were statements in its own interest. An expression may relate to more than one interest and still relate to the public interest. If so, the defendant can meet its onus: Pointes, supra, at para 65. Also, at this stage, the motivations of Lancaster are not relevant, because the test for whether an expression relates to a “matter of public interest” is an objective one: see Pointes, supra at para 65. It is reasonable on the record to conclude that Lancaster’s subjective interests and the objective public interest in this expression were intertwined.

[60] I conclude that Lancaster has met its onus on a balance of probabilities that its expressions were related to matters of public interest, thus attracting the presumptive application of section 137.1(3).

Has Kenaidan demonstrated on a balance of probabilities that its claim of libel has substantial merit? (s. 137.1(4)(a)(i))

[61] In order to establish “substantial merit” in a libel case, a plaintiff must establish:

i) that the defendant made the statement, ii) that the words complained of were published to at least one person, iii) that the words referred to the plaintiff, and iv) the words in their natural and ordinary meaning, or in some other meaning pleaded by the plaintiff, are defamatory.

Platnick, supra at para 51; Canadian Standards Association v. P.S. Knight Co. Ltd., 2019 ONSC 1730 at para 42.

[62] Here, the expression was made and signed by the Lancaster Officers and addressed to the Mayor, Councillors, CAO and a senior building official at the City of Hamilton. Kenaidan was identified as one of the JV partners, with whom Lancaster was involved in a legal dispute. As a result, requirements (i), (ii) and (iii) are easily met.

[63] As for whether the words spoken were defamatory, the test articulated in Able Translations Ltd v. Express International Translation Inc., 2018 ONCA 690 at para 29 applies: could the language used, when considered in its ordinary meaning by a reasonable and fair-minded reader, lower Kenaidan’s reputation in the eyes of reasonable people?

[64] I conclude that the words “mismanagement” “incompetence” and “poor project planning and coordination” used to describe Kenaidan’s work on the Hamilton stadium project in the Lancaster letter would tend to lower Kenaidan’s reputation as a competent contractor in the eyes of an objective observer.

[65] The second aspect of the defamatory nature of the expression flows from the disputed payments Lancaster asserted that it was owed. Lancaster said it was owed $4 million and was suing Kenaidan for the unpaid amounts. It said the City should reject Kenaidan’s apology and refuse to consider it for future projects while there were outstanding payables to local companies. Kenaidan denied that it owed the amounts claimed by Lancaster. Lancaster’s claim for money owed to it by Kenaidan could objectively be viewed as having a negative impact on Kenaidan’s reputation. This is particularly so if Lancaster’s claim was being used to influence the City’s consideration about Kenaidan’s eligibility for future projects.

[66] Whether or not a claim has “substantial merit” requires a reasonableness lens. If the claim is legally tenable and a reasonable trier of fact could conclude the claim can succeed, then it will be found to have “substantial merit:” Platnick, supra at para 48.

[67] I conclude that Kenaidan’s claim has substantial merit according to the criteria established for measuring defamation claims under s. 137.1(4)(a)(i). The evidence in support of this finding arises from the undisputed words used in the Lancaster letter which suggests future consequences for the failure to make the payments claimed and the lack of competence of the contractor (Kenaidan) as in this sentence:

But how can the residents of this city accept Kenaidan’s apology or consider it for future projects when it has yet to pay outstanding payables to local companies who completed the job despite the incompetence of the general contractor?

A reasonable trier of fact could accept this as evidence of defamation applying to Kenaidan.

Has Kenaidan demonstrated that Lancaster has no valid defence? (s. 137.1(4)(a)(ii))

[68] Lancaster and the Lancaster Officers have raised three defences: justification, fair comment and qualified privilege. The test for determining whether Kenaidan has established that none of these is a valid defence comes from the Court of Appeal in Pointes at para 84. The “valid defence” reference in s. 137.1(4)(a)(ii) does not mean “available on the facts.” A “valid” defence is a “successful” defence, to be determined prior to trial on the materials available on the motion. The plaintiff need only show that the given defences may not succeed at trial even if those defences are available to be raised in law and logic. In order to have this step have any meaning at all, it cannot be that “successful” means without question or 100% certain. That would be an unworkable and impossible test to apply.

[69] It is a nuanced test to apply at this stage. I say that because the meaning of “valid” can also mean “well grounded,” [1] “justifiable,” [2] logically correct, [3] “sound” [4], “just” [5] and “well-founded.” [6] These alternative meanings suggest that valid often means viable or available. In other contexts, the Supreme Court of Canada has used “valid defence” in this more expansive sense, including in its discussion of available defences available for regulatory offences under an “Act respecting the distribution of financial products and services” R.S.Q., c. D‑9.2: La Souveraine, Compagnie d’assurance générale v. Autorité des marchés financiers, 2013 SCC 63, [2013] 3 S.C.R. 756 at paras 57, 65 and 74. There, the phrase “valid defence” was used synonymously with “available” or “lawful.” “Valid defence” was used in that sense in both Lévis (City) v. Tétreault; Lévis (City) v. 2629‑4470 Québec inc., 2006 SCC 12, [2006] 1 S.C.R. 420 at para 30 and in M.J.B. Enterprises Ltd. v. Defence Construction (1951) Ltd., [1999] 1 S.C.R. 619 at para 54. Therefore, care must be taken to use this phrase from s. 137.1(4)(a)(ii) as it has been defined in Pointes.

[70] Accordingly in considering the defences available and applying them to the record on this motion, I have interpreted ‘valid defence’ in s. 137(4)(a) of the CJA to mean a ‘successful defence,’ which is a defence that a reasonable trier would almost certainly accept as the only possible outcome on the evidence. A defence that probably would be accepted but is not the only reasonable interpretation of the evidence is not a ‘valid defence’ for the purposes of s. 137(4)(a).

The Defence of Justification

[71] Justification is available where the defendant shows that there is substantial truth to the “sting” or the “main thrust” of the expression: Platnick, supra at para 58.

[72] Here, there were two “stings.” The first comes from the statements in the Lancaster letter concerning the mismanagement of the project by Kenaidan, as part of the JV. The second comes from the statements relating to the outstanding payments in the amount of $4 million that Lancaster said was owed by Kenaidan.

[73] The claim of $4 million owing to Lancaster had been a matter of public information for over two years. The Lancaster letter included the amount it alleged it was owed, and made explicit reference to the fact that the matter was before the courts. Lancaster has a successful justification defence available to it on the basis that it included the information about its lawsuit in the letter. It is implicit in Lancaster’s letter to the City that it claimed to be owed this amount and that it was taking legal steps to recover the amounts it claimed to be owed. This is supported by the pleadings filed on the motion and Kenaidan’s public statements, that it was disputing the amounts owed. It is the fact of the dispute, the allegation of non-payment which is the topic of discussion and which would attract a valid defence of justification.

[74] In considering justification for this aspect of the letter, I have considered the source of the comment: unlike a media outlet reporting on a dispute which must provide a balanced account of the matter and avoid reporting a dispute as “fact,” Lancaster is the claimant. By including the remedy sought (a lawsuit) for the claimed debt, Lancaster is able to rely on justification based on the accuracy of the fact of the lawsuit and claim at the time of the expression.

[75] In relation to descriptions of the JV’s mismanagement and incompetence, these also attract a finding that Lancaster has a valid defence. I conclude this on the basis of four facts available on this record. First, there was the acknowledged delay in the construction of the Hamilton stadium, which was the subject of public comment and concern as to the impact on major sporting events that were to take place at the Hamilton stadium. Second, Kenaidan acknowledged that it had failed to consider certain design aspects at an early enough stage leading to part of the delay. Third, Kenaidan acknowledged to the City that the project did not demonstrate its capacity as a contractor, it had disappointed the City and itself, and that this had harmed its reputation. Finally, it is undisputed that the City decided to ban Kenaidan from bidding on construction projects for two years. This decision followed Kenaidan’s statements about its failings. The City Council minutes recorded the basis of the decision as due to Kenaidan’s “acts or omissions.” Although by the time of this motion, Kenaidan asserted that it made its apology for the faults of Lancaster, there was no evidence that this was asserted at the time of the relevant events. Such an assertion is made two years after those events, and in this context, is not plausible.

[76] Thus, Lancaster had a factual foundation available to it that justified its comments about Kenaidan’s mismanagement of the Pan Am Games construction project. Given the evidence before me, I conclude that a reasonable trier would almost certainly accept Lancaster’s justification defence. I therefore conclude that Kenaidan has failed to show that Lancaster has no valid defence to those aspects of its expression.

The Defence of Fair Comment

[77] Lancaster also raises the defence of fair comment to its expression. This defence applies to statements which are a matter of public interest and are opinion based on fact, recognizable as comment and fairly made. Bondfield, supra at para 17; WIC Radio v. Simpson, 2008 SCC 40, [2008] 2 S.C.R. 420 at para 28; Thompson v. Cohodes, 2017 ONSC 2590 at para 27.

[78] Is an assertion by the defendants that it was owed money by Kenaidan a matter of fair comment on a matter of public interest in these circumstances? As a starting point, the media reports about the litigation when the claims were filed and the public interest in the construction satisfy me that the public interest part of the fair comment test applies.

[79] Is the expression made by Lancaster and the Lancaster Officers recognizable as “comment?” WIC Radio notes that “comment” is generously interpreted. The context here makes it clear that there was ongoing litigation relating to payments disputed by Kenaidan in 2015. Kenaidan had not settled nor was it known what its defence would be, owing to the indulgence it sought and received while Lancaster consolidated its claims.

[80] The pleadings in the construction litigation support the facts that Lancaster has a claim of approximately $4 million against the JV, in lienable and non-lienable amounts. The matter has not been tried. The Lancaster letter stated the purpose of its letter up front: to “express serious concern” over the imminent resolution to the City’s legal dispute with Kenaidan. This is clearly recognizable as a statement of its opinion and its rationale for that opinion follows logically in its letter.

[81] Kenaidan has argued that to be recognizable as opinion, phrases such as “I believe that” or “in my opinion” are required: that without such expressions the letter must be read as assertions of fact and not Lancaster’s opinion. Three authorities were cited in support of this submission. The first, Thompson v. Cohodes, at paras 26-28, makes reference to an allegation of fraud and cites Wasserman v. Freilich, [2016] EWHC 312 (Q.B.) at para 16 for the proposition that an allegation of dishonesty, murder or rape cannot be converted to an opinion simply by using in a formulaic way, “I believe” or “she thinks.” This suggests that much will depend on the context and the nature of the statements or allegation involved but not that there is a particular formula of wording necessary to denote an opinion.

[82] The second authority cited was Levant v. Day, 2019 ONCA 244 at paras 13-14. There, the impugned expression included insulting social media postings, without any basis in fact made about an individual. These included accusations of “unadulterated sleaziness,” and “selfish enrichment” at the expense of forest fire victims and use of the phrase, “sleazy opportunist.” These are very different expressions, made about an individual and in a different context from this case. Levant v. Day does not stand for the conclusion that particular words are required to signal opinion.

[83] The third authority, Montour v. Beacon Publishing Inc., 2019 ONCA 246 at para 50, also found no valid defence of fair comment, in circumstances where a magazine article linked a tobacco producer to smuggling, terrorism and organized crime without any fact checking or due diligence.

[84] These three cases involved defamation proceedings in which serious allegations of criminality were made without a basis in fact from which those opinions could be drawn. They are far different circumstances from the case at bar. Here, Lancaster made a first person statement on a matter of litigation that was already in the public eye. Lancaster’s allegation was that it was owed funds and that a lawsuit to recover those funds was ongoing and not settling, although other lawsuits related to the same construction appeared to be about to settle. The dispute was between two corporate entities. The words used were not vitriolic, or gratuitously insulting. Kenaidan was sanctioned for its role in overseeing the construction. Lancaster was asserting what had been claimed in public court filings: that money was owed.

[85] I find that in this context, this portion of the expression is recognizable as the position, or opinion of Lancaster, based in the established facts of construction lien litigation for the amounts cited in its letter and corroborated by its pleadings. I do not take the cases cited to require repetition of formulaic phrases such as “in our opinion” or “in Lancaster’s opinion” to be the only way to express an opinion, particularly where in the same publication, there is reference to the litigation in order to seek payment. It is implicit that the Lancaster suit was an ongoing matter, not settled or decided yet.

[86] Kenaidan has not met the onus of showing that Lancaster does not have a valid defence in the form of fair comment to its assertions of being owed $4 million for its work on the Pan Am Games construction projects. Given the nature of Lancaster’s claims in the lien litigation, I conclude that a reasonable trier would almost certainly accept Lancaster’s fair comment defence.

The Defence of Qualified Privilege

[87] The defence of qualified privileged exists where the maker of the expression and the receiver have corresponding duties to make and receive the expression. Such a duty may be legal, social or moral: Platnick, supra at para 86.

[88] This defence is rarely available for broad publication: here, Lancaster’s letter was made available to the media and the allegations were repeated in media interviews by the Lancaster officers. Lancaster agreed it did not have a duty or obligation to inform the media at large. It would be a reasonable conclusion available to a trier of fact to reject this defence on that basis and it is not more likely than not that this defence would succeed. I conclude that Kenaidan has met its onus of showing that Lancaster does not have a valid defence on qualified privilege to its expression concerning Kenaidan.

[89] On the whole of the evidence before me, then, Kenaidan has not demonstrated that Lancaster has no valid defence. Although Kenaidan has demonstrated that qualified privilege is not a successful defence in this case, it has not done so with respect to either justification or fair comment. In my view, Lancaster has those two valid defences available to it.

Balancing the Harm Suffered Against the Interests in Protecting the Expression Section 137.1 (4)(b)

[90] As I have found that the plaintiff cannot establish that there are grounds to believe that there is no valid defence to the action under s. 137.1(4)(a)(ii), I do not need to go on to deal with the policy balancing mandated by s.137.1(4). I do so for completeness or in case I may be found to have erred on appeal. The final provision which also must be established by the plaintiff on a balance of probabilities is from section 137.1(4)(b) which requires consideration of whether:

The harm likely to be or have been suffered by the responding party [plaintiff] as a result of the moving party’s expression is sufficiently serious that the public interest in permitting the proceedings to continue outweighs the public interest in protecting that expression.

[91] I begin the analysis by considering the harm suffered or likely to be suffered by Kenaidan.

Kenaidan’s Damages because of the Expression

[92] Kenaidan has provided one example of the impact of the Lancaster letter and media: in 2017, one Hamilton subcontractor declined to bid on a Kenaidan project. Damages were not quantified, and there was no evidence of any loss of contracts, profits or opportunities. No evidence was included on Kenaidan’s profits, market share or other quantifiable damages in the two years that passed since the Lancaster letter.

[93] Monetary damages suffered by a plaintiff are a key feature in the assessment of this part of the test under s. 137.1(4)(b): United Soils Management Ltd v. Katie Mohammed, 2019 ONCA 128.

[94] Although damages are presumed where defamation is established, there is no presumption as to the quantum of damages: United Soils, supra at para 22.

[95] In considering the harm suffered here, there is also a causal complication. Kenaidan’s public statements, one week prior to the Lancaster letter, acknowledged that its acts or omissions had damaged its reputation with the City. President and COO of Kenaidan agreed that he had told City Council that “It injured our reputation. It’s something we regret and we will regret for a long time.” This damage to reputation arose before the Lancaster letter and involved the same project. (Although neither party argued the application of section 2 of the Apology Act, 2009, S.O. 2009, c. 3, it would not appear apply to this matter, given that the apology was made to the City in this case and the apology is not being used to avoid liability.)

[96] The City’s sanctions against Kenaidan may have contributed to any financial impacts related to the Pan Am Games construction, separate and prior to any reputational harm as a result of the Lancaster expression. Kenaidan has not quantified these related impacts to its reputation nor sought to separate these from any alleged monetary harm as a result of the Lancaster letter. In contrast, in Bondfield, supra at para 24, there was evidence that the plaintiff had “lost contracts, potential construction partners, and potential funding from lenders as a result of the articles written in the Globe.”

[97] There has been no quantification yet of the quantum of any damage to Kenaidan’s reputation flowing from its own acts prior to the Lancaster letter. Proof of the quantum of harm, if any, attributable to any defamatory statements proven against Lancaster cannot be established now and will be very difficult to establish. I therefore conclude that if the Kenaidan claim were to succeed despite my view of the applicable defences above, it has a valid claim of harm that flows from the finding that defamatory comments were made, but that the quantum of any such damage has not been established.

Motivations of Lancaster

[98] Kenaidan submits that Lancaster took a “cheap shot” to try and leverage its lawsuit against Kenaidan at the time of the City inquiry and ban.

[99] The motivations of Lancaster were clear from the content of its letter: it believed it had been wronged financially by Kenaidan and said so. It described its feeling of unfairness over the settlement of other lawsuits while it was experiencing financial hardship. The letter, the backgrounder and the public statements revealed that Lancaster was asserting its interest, having participated in a public project which had experienced problems.

The Nature of the Allegations

[100] Another feature that is considered in the balancing of the harm caused to the desirability of protecting the expression is the nature of the expression: if the speech in question is vulgar, vitriolic or offensive it may attract a reduced level of protection. (Levant, supra at para 23.)

[101] Here, the words spoken were in the language of business and provided in the context of ongoing litigation, descriptions of the business interests of Lancaster and in the harm it alleged it had suffered because of the failed payments at the heart of its claim against the JV. It was framed further in the context of impact on both its business and on its employees as part of the local economy. There was no personal attack on any individual: the plaintiff is a body corporate.

[102] The context of the expression was also of high public interest: this was a story that had developed over the years of construction. Serious criticisms were made by many others prior to the Lancaster letter. City Council imposed a sanction on Kenaidan. Infrastructure Ontario made critical comments. The leader of the opposition noted a systemic issue of payment of subcontractors and mentioned possible legislative responses in media coverage about this particular building project. All three levels of government were involved in its funding. There was litigation that potentially involved the City and Kenaidan. The stated expectation of Kenaidan was that it should return to bidding on public contracts once the two year ban had been served. While Lancaster’s expressions were self-interested efforts to obtain payment, they also were political speech designed to influence the City to help get Lancaster paid as part of the City’s settlement. Overall, I conclude that the nature of this expression attracts a significant interest in its protection.

Other Factors

[103] Other factors that have been considered in the balancing exercise include a pattern of litigation, whether there is a power imbalance as between the parties and whether the proceedings have been brought for a punitive or retributory purpose. In this case, there is no pattern of litigation. Accordingly, only the latter two of these additional factors will be discussed.

[104] Was there a power imbalance? There is some evidence of a power and financial differential here. Kenaidan is described as a national contractor with experience in some major public infrastructure projects. Lancaster is a local subcontractor employing approximately 100 people in Hamilton. This is not a determinative factor. It is not as great an imbalance as an individual citizen facing a well-financed corporate litigant.

[105] Was there evidence of a punitive aspect to Kenaidan’s defamation suit? The lawsuit was confined to Lancaster, although similar criticisms and claims had been made by other contractors and union officials associated with the project. Yet Kenaidan acted only against Lancaster. The size of the damages claimed and the absence of evidence of harm of this scale is suggestive of a backlash against Lancaster as a result of its suggestion that the City should reconsider permitting Kenaidan to bid while the Lancaster lawsuit was outstanding. Both parties accused each other of using improper leverage in the construction litigation: Kenaidan described the Lancaster letter as a “cheap shot” and Lancaster characterized the $15 million lawsuit as an attempt to bully Lancaster into settling its claim.

[106] Contrary to the plain words of its public statements and apology to the City, Kenaidan now says that its apology was for delays caused by Lancaster. This is inconsistent with the statements at the time, both in public and to City Council by Kenaidan. The former President of Kenaidan acknowledged that Kenaidan had contributed to the delays by its inattention to design at an early stage.

[107] It appears that Kenaidan reacted to the Lancaster letter by blaming it for some self-inflicted reputational damage. Kenaidan was unhappy with Lancaster for inserting itself into the public debate at a moment when Kenaidan was taking responsibility in an effort to rebuild its reputation.

[108] In considering all of the factors discussed above, I conclude that the background, context and the nature of the expression outweighs the risk of harm to Kenaidan given the absence of evidence of any significant monetary harm to Kenaidan flowing from Lancaster’s expression. The evidence here favours the protection of the expression over permitting the proceedings to continue. Kenaidan has not met its onus under section 137.1(4)(b).

V. CONCLUSION

[109] The motion is granted, and the proceedings instituted by Kenaidan are dismissed.

VI. COSTS

[110] If the parties are unable to agree as to costs, brief submissions on costs from Lancaster are to be delivered on or before August 10, 2019 and from Kenaidan on or before August 18, 2019.

Leiper J. Released: July 25, 2019