Court File and Parties

COURT FILE NO.: CV-17-571237

DATE: 20200226

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Subway Franchise Systems of Canada, Inc., Subway IP Inc., and Doctors Associates Inc, Plaintiffs

– and –

Canadian Broadcasting Corporation, Charlsie Agro, Kathleen Coughlin, Eric Szeto and Trent University, Defendants

BEFORE: E.M. Morgan J.

COUNSEL: William McDowell, Sana Halwani, Paul-Eric Veel, and Kaitlin Soye, for the Plaintiffs

Christine Lonsdale, Gillian Kerr, and William Main, for the Defendants, Canadian Broadcasting Corporation, Charlsie Agro, Kathleen Coughlin, and Eric Szeto

Alexander Pettingill, Joyce Tam, and Natasha O’Toole, for the Defendant, Trent University

HEARD: Cost submissions in writing

COSTS ENDORSEMENT

I. The double motion

[1] On November 22, 2019, I released my judgment dismissing the action as against the Defendants, Canadian Broadcasting Corporation, Charlsie Agro, Kathleen Coughlin, and Eric Szeto (“CBC”). CBC had moved to dismiss on the grounds that the claim by the Plaintiffs (collectively “Subway”) was a Strategic Litigation Against Public Participation (“SLAPP”) suit pursuant to section 137.1 of the Courts of Justice Act, RSO 1990, c. C43 (“CJA”).

[2] At the same time, I dismissed a similar motion by the Defendant, Trent University (“Trent”). I held that there were no grounds to dismiss the claim against Trent and that Subway’s action against Trent will proceed on its course.

[3] I invited cost submissions in writing and have now received submissions from all three parties. Given the mixed results, CBC is entitled to costs as against Subway, while Subway is entitled to costs as against Trent.

II. The CBC motion

[4] CBC requests costs on a full indemnity basis. It bases this request on section 137.1(7) of the CJA, which provides:

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.

[5] In Fortress Real Developments Inc. v Rabidoux, 2018 ONCA 686, paras 60-62, the Court of Appeal emphasized that although ultimately the issue of costs is one of discretion for the motion judge, the analysis is to “start from the premise that the defendant should receive costs on both the motion and in the proceeding on a full indemnity basis.” As Doherty JA explained it, at para 61, the section is “intended to impose cost consequences that will serve as a strong deterrent to SLAPPs and will encourage defendants to seek the quick termination of that kind of litigation by way of a s. 137.1 motion.”

[6] Although CBC was successful in having the court determine that Subway’s claim against it was a SLAPP, this motion was not what one would call a “quick termination” of the litigation. As counsel for Subway point out in their response to the CBC’s cost submissions, CBC waited a considerable amount of time, and appears to have incurred roughly half of the legal fees it seeks, before bringing the motion. While section 137.2(1) of the CJA allows an anti-SLAPP motion to be brought at any time during the course of an action, the timing here runs contrary to the Court of Appeal’s guidance that “these motions should be brought early in the proceedings”: 1704604 Ontario Ltd. v Pointes Protection Association, 2018 ONCA 685, para 73.

[7] Once the Notice of Motion is served, section 137.1(2) of the CJA requires that the motion be heard within 60 days. This motion met that requirement only in the most formal sense. As the 60-day limit approached, the parties appeared before me to “start” the motion with a discussion of further scheduling. That attendance ultimately resulted in scheduling a hearing on the merits several months down the road. I was advised at the time that the motion was a complicated one that would require time for a number of affidavits to be prepared by all parties and cross-examinations to be conducted.

[8] Much of the length and complexity of the motion is attributable to the approach taken by Subway. As counsel for CBC points out, Subway filed a 14-volume record and supplementary record, including affidavits from 6 fact witness and 2 expert witnesses, and examined a third party. Its materials were overwhelmingly aimed at the issue of truth in the news magazine item that was the subject of the suit – an issue which goes to the heart of the merits of Subway’s defamation claim, but is only relevant in a minor way to the SLAPP criteria.

[9] The Court of Appeal in Pointes Protection, paras 73, 76, 77, has admonished parties not to take the approach of litigating the claim on its merits in the guise of a motion under section 137.1:

Section 137.1 does not provide an alternate means by which the merits of a claim can be tried, and it is not a form of summary judgment…

The timing of the motion and the limits on cross-examination are not conducive to either party putting its ‘best foot forward’, as is expected in summary judgment proceedings…

The motion records compiled by the parties on s. 137.1 motions will be more abbreviated than would be expected at a later point in the proceedings.

[10] Despite the policy context established by the Court of Appeal, Subway’s approach to CBC’s motion was anything but abbreviated. As I indicated at para. 21 of my judgment, the first step required by s. 137.1(4)(a)(i) is for Subway to show that its claim has substantial merit. That, however, does not mean that the merits of the claim must be established as they would be at trial. “An evaluation of potential merit based on a ‘grounds to believe’ standard contemplates a limited weighing of the evidence, and, in some cases, credibility evaluations: Pointes Protection, para 82.

[11] With the limited nature of an anti-SLAPP motion in mind, the Court of Appeal has advised that, “When assessing the merits for the purposes of s. 137.1(4)(a), the motion judge cannot approach the record as if it were a trial record or even a r. 20 summary judgment record”: Ibid., para 77. By the time this matter came up for the substantive hearing, however, the record that Subway had compiled was a fulsome defense of its claim on the merits, precisely as a plaintiff would be expected to put forward in response to a summary judgment motion by a defendant. Rather than raising a threshold question, the motion turned into a massive undertaking to which CBC, as moving party, was compelled to reply.

[12] I do not mean to be critical in reviewing this background. In some ways, the record that Subway put together, and that CBC had to grapple with, required a herculean lawyering effort. Although CBC’s counsel tried to economize somewhat in their response to Subway’s response to CBC’s motion, the record overall was on both sides a monument to high-end legal work in complex litigation. It had the effect, however, of turning what was intended to be an abbreviated procedure into the opposite of what the Court of Appeal has described.

[13] CBC’s costs are undoubtedly high, reflecting the large-scale undertaking that this motion became. The Bill of Costs comes to over $800,000, once one adds up fees, disbursements, and HST. Counsel for Subway submits that the fees of nearly $582,000 are significantly higher than the highest reported amount in a section 137.1 motion.

[14] As a general rule, I am reluctant to second-guess counsel’s investment of time in bringing a successful proceeding. That is particularly the case here, where I do not have a Bill of Costs from Subway to compare with that of CBC. That said, I do have Subway’s Bill of Costs with respect to the Trent motion. It is not difficult to extrapolate from the figures cited there that Subway must have incurred fees in the CBC motion that are equivalent to those incurred by CBC.

[15] Given the multi-volume record that Subway compiled, the number of cross-examinations in which it engaged, and the several lawyers on its team at the hearing, it would almost inevitably have to be the case that Subway spent as much as CBC did on its legal fees and disbursements. While I admire thorough legal work, this is not the case in which it lies with Subway to say that the opposing side overworked the file.

[16] Section 137.1(7) of the CJA makes clear that a successful party is entitled to costs not just of the motion but of the proceeding overall. Under the circumstances, I will round down CBC’s cost request somewhat given its magnitude compared with other anti-SLAPP motions, but I find no other reason to deviate from the expectation that a successful party in a motion under section 137.1 is entitled to full costs.

III. The Trent motion

[17] Subway seeks partial indemnity costs of the motion brought against it by Trent. Its counsel submits that Trent was unsuccessful on every aspect of its section 137.1 motion – so much so that it should have been evident that this was not properly an anti-SLAPP motion in the first place.

[18] Trent submits that no costs should be payable to Subway. Its counsel points out that section 137.1(8) of the CJA states:

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.

[19] Trent’s motion was framed as an anti-SLAPP motion and took aim at the negligence claim brought by Subway. Counsel for Trent correctly states that there did not appear to be any prior cases expressing the view that s. 137.1 is not available in the context of a negligence action. Trent further submits that its motion to dismiss was a novel one, and that this creative approach to the litigation “should not be held against it.”

[20] Trent takes the position that it streamlined its motion by seeking to strike only the negligence claim against it, and that it made efforts to limit itself to only two legal issues: 1) did Trent owe Subway a duty of care; and 2) did Subway have a separate cause of action in negligence independent from the defamation claim? Counsel for Trent specifically tried to eliminate any standard of care issues from the motion, as those are fact-based rather than raising legal questions. In focusing on the two legal questions, Trent hoped that the motion could be addressed economically with little or no factual record.

[21] Counsel for Subway replies that if Trent wanted to test the legal basis of its negligence claim in the absence of a factual record, it could have done so by bringing a motion under Rule 21 of the Rules of Civil Procedure. Instead, it proceeded with a section 137.1 motion in the unusual context of a negligence claim. Perhaps surprisingly, it left Subway’s defamation claim against it out of the motion, even though defamation is a more commonplace cause of action for a SLAPP suit. It was self-evident from the outset that this was going to be an uphill battle.

[22] It is fundamental to this area of law that anti-SLAPP motions are about freedom of expression. Section 137.1 was enacted, in the view of the Court of Appeal, because “[t]he free and open expression of divergent, competing, and strong viewpoints on matters of public interest is essential to personal liberty, self-fulfillment, the search for the truth, and the maintenance of a vibrant democracy”: Pointes Protection, para 1. For that reason, “[d]efamation lawsuits…have proved to be an ideal vehicle for SLAPPs”: Ibid., para 3. Negligence actions, which challenge conduct rather than speech, are not such an ideal vehicle. No doubt that is why Trent’s motion was so novel.

[23] In the result, Trent brought a motion that raised far more than questions of law; and in doing so, it failed on every aspect of the section 137.1 test. It did not even meet the relatively low threshold of showing that there was any communication on a matter of public interest at stake. Indeed, Trent made no serious argument and led no evidence to show that Subway’s negligence claim against it was actually a SLAPP suit.

[24] Subway’s claim in negligence – as opposed to its claim in defamation – is aimed at challenging Trent’s laboratory procedures. It was predictable that a court would find that this has precious little, if anything, to do with public participation or expression on matters of public interest.

[25] Unlike in its response to CBC’s motion, which was properly an anti-SLAPP proceeding, Subway was justified in treating Trent’s motion as a form of summary judgment. It had little to do with the fundamental policies at stake in section 137.1 of the CJA and had far greater resemblance to an ordinary motion to dismiss a claim under the Rules. In these circumstances, the Court of Appeal has held that the policies underlying the costs provisions of sections 137.1(7) and (8) are not applicable:

Those sections are designed to encourage defendants, who have been sued over expressions on matters of public interest, to bring s. 137.1 motions for an early dismissal of those claims. The costs provisions ease the financial burden and risk placed on the defendant who seeks an early termination of what it claims is a SLAPP.

The purpose underlying the costs provisions in s. 137.1 disappears when the lawsuit has none of the characteristics of a SLAPP, and the impugned expression is unrelated to a matter of public interest. In those circumstances, it is not the initial lawsuit challenging the expression that represents a potential misuse of the litigation process, but rather the s. 137.1 motion.

Veneruzzo v Storey, 2018 ONCA 688, paras 38-39 [citations omitted].

[26] I will therefore exercise my discretion to order Trent to pay Subway costs on a partial indemnity scale. The policy reasons for overriding the indemnity principle, which is applicable to other motions under Rule 57.01(1)(0.a), do not exist here.

[27] As with CBC, I would be reluctant to second-guess Subway’s counsel’s investment of time and effort into their successful defense of Trent’s motion. They did what it took to defeat an attempt to dismiss their negligence claim at an early stage.

[28] Subway seeks just over $222,000, all inclusive, on a partial indemnity basis. Given the scope of this motion, that is high but not beyond reason. If Trent encountered more than it bargained for in response to an anti-SLAPP motion, it is because Trent’s motion was more of a summary judgment motion in disguise. It did not raise the policy concerns about SLAPP suits, and so could not really be addressed on that basis.

IV. Cost awards

[29] Subway shall pay CBC costs in the amount of $500,000, plus disbursements in the amount of $167,739.65 (taxable) and $11,178.73 (non-taxable), and HST on fees and disbursements where taxable.

[30] Trent shall pay Subway costs in the all-inclusive amount of $222,000.

Morgan J.

Date: February 26, 2020