COURT FILE NO.: CV-19-81239

DATE: 20211119

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

JEFF THORMAN and MICHELLE THORMAN

Plaintiffs (Responding Parties)

– AND –

KRISTA McGRAW

Defendant (Moving Party)

J.F. Lalonde, counsel for the Plaintiffs (Responding Parties)

Karin M. Pagé and Courtney M. March, counsel for the Defendant (Moving Party)

HEARD: October 19, 2021

Reasons for DECISION

R. Smith J.

Overview

[1] The defendant Krista McGraw (“McGraw”) has brought a motion pursuant to section 137.1 of the Courts of Justice Act, RSO 1990, c C. 43 (“the CJA”), to dismiss the defamation action against her. The issue to decide is whether the Prevention of Proceedings that limit Freedom of Expression on Matters of Public Interest provisions apply in the circumstances.

[2] The plaintiffs, Jeff and Michelle Thorman (“the Thormans”) submit that McGraw’s motion should be dismissed, and their defamation action allowed to proceed. They submit that McGraw referred to them in her online post on Reddit.com as “these two fraudsters” and as “scammers”. They further submit that the defence of fair comment would not be available to her because she acted with malice as her stated motive was to try to drive them out of business. She stated in her post that “if everyone shares their experiences and does their homework we can drive the scammers out of business”.

Background Facts

[3] In December of 2013, Ms. McGraw entered into an agreement with Thorman Reno Inc. (“Thorman”) to renovate her bathroom. The renovation was to start by February 3, 2014 and to be finished by February 28, 2014.

[4] Thorman agreed to complete the renovation at a cost of $14,916.00 for labour and materials and he estimated a further cost of approximately $5,000.00 for fixtures. McGraw provided a deposit of $1,490.00 upon signing. The agreement provided that the Contractor (“Thorman”) was responsible for obtaining any required permits. Ms. McGraw was told by Mr. Thorman, incorrectly, that none were required.

[5] McGraw agreed to select the fixtures by no later than the 1st week of January 2014. The costs of fixtures were not included in the contract as McGraw decided to select her own fixtures.

[6] Throughout January 2014, the parties emailed each other about the vanity, fixtures, and tiles. Ms. McGraw asked repeatedly for assistance with the selection and pricing with respect to the fixtures and vanity.

[7] The parties were to meet on January 27, 2014 but the meeting was rescheduled for January 29, 2014, at which time Mr. Thorman collected a further deposit of $4,000.00 for materials, bringing the total deposit to $5,490.00. Thorman indicated that he had to delay commencement of the renovations by a week because he was attending a trade show.

[8] By February 2, 2014, Thorman had not provided any breakdown of the costs for the fixtures as requested and was unable to do so before leaving on his trip. Mr. Thorman advised that he had ordered the vanity and the tiles, which turned out to be false.

[9] Thorman contacted McGraw upon his return from the trade show. They agreed to meet on February 9, 2014 to discuss fixtures. Based on McGraw's selections, Thorman provided her with a revised estimate of $12,704.00 for fixtures and McGraw gave him a cheque for $3,000.00.

[10] On February 11, 2014, Mr. Thorman arrived at around 1:00 pm with an employee to start demolition. They left by 4:45 pm, leaving the waste from the demolition in the bathroom and adjacent bedroom. The next day, they did not return to clear the worksite, as promised.

[11] Ms. McGraw assumed that Thorman, as a contractor, was eligible for various discounts with retailers on the fixtures. However, when she reviewed the revised estimate, she discovered that Thorman was planning to charge her $1,520.00 for the sink faucets and rough-in, nearly 250% over the market price of $628.39 at Home Depot for the same sink faucets. This was significantly more than the original estimate of $300.00. Similarly, Thorman planned to charge her $1,435.00 for the shower which she discovered she could purchase on-line for $466.81 inclusive of shipping and taxes, a markup of $1,000.00. On February 12, 2014, Mr. Thorman failed to show, and Ms. McGraw emailed him a comparison of prices she had found on-line to those presented in his revised estimate for fixtures.

[12] The following morning, Thorman did not arrive at the house as agreed. That afternoon, when McGraw was out, and she received a voicemail from Thorman, indicating that he was at the house and stated that she was in breach of the contract. Thorman also alleged that McGraw had also breached the contract on February 10, 2014, when she was momentarily away picking up her children from school. Ms. McGraw then put a stop payment on the cheque for $3,000.00.

[13] On February 17, 2014, Ms. McGraw sent a letter and email to Thorman cancelling the contract. McGraw was troubled to learn that permits were in fact required for the renovation despite Mr. Thorman’s previous representation that they were not. On cross-examination, Mr. Thorman suggested he was trying to save Ms. McGraw money, claiming “permits could be obtained by the homeowner for a couple hundred dollars but if it’s done by a third party, it costs a few thousands of dollars”.

[14] On February 27, 2014, Ms. McGraw filed a complaint with the Better Business Bureau (the “BBB”) and the Ministry of Consumer Services. In his response to the BBB, Mr. Thorman accused Ms. McGraw of stealing his tools, which was untrue.

[15] On March 6, 2014, Mr. Thorman sent Ms. McGraw a final invoice. Notwithstanding that he worked less than half a day to demolish the bathroom and had not purchased any fixtures or materials, he claimed an additional amount of $4,873.40, over and above the $5,490.00 deposit already paid. Mr. Thorman has not provided any support for the additional amounts claimed.

[16] The Thormans dissolved Thorman Reno Inc. in 2015. In 2016, Mr. Thorman worked briefly for Oakwood, an Ottawa-based renovation services company, before launching a new YouTube business in April 2016. He also resumed his home renovation services under the new name, Ottawa Design and Build.

[17] When asked why he dissolved Thorman Reno Inc. and changed the business name, Mr. Thorman explained it was for marketing purposes, and also stated that his “business model wasn’t about trusting clients to send me referrals”.

[18] In March 2016, Ms. McGraw wrote and described her unsatisfactory experience with the Thormans on the internet site HomeStars.

[19] Mr. Thorman ceased operating Ottawa Design and Build in 2017, and since then has focused on three YouTube channels: “Home RenoVision DIY”, “Reality RenoVision” and “Home RenoVision en Español”.

[20] By 2017, Ms. McGraw noticed that her unresolved complaint with BBB had been removed, and that Thorman’s rating had returned to an A+, which she found misleading given her experience.

[21] Before she made her Post, Ms. McGraw read that the Rodneys had referred to Mr. Thorman publicly on Reddit as a “perpetual scam artist” and stated that he “botched their reno job and took their money without finishing the job” and also stated that “maybe he will grow some morals and stop stealing from and mistreating people”.

[22] McGraw also read that another Reddit user referred to Mr. Thorman as: “a deceitful person who takes advantage of every opportunity to gain a few bucks even if it means screwing over his clients”.

[23] On October 24, 2017, Ms. McGraw posted about her experience with the Thormans on Reddit.com (the “Post”) and referred to the Thormans as fraudsters and scammers. By this date, Ms. McGraw had not been refunded any of the $5,490.00 she had paid for “labour and materials” and believed she had been “ripped off”.

[24] On April 4, 2019, nearly 18 months after the Post, the Thormans sent a letter to Ms. McGraw demanding compensation for libel.

[25] In May 2019, Ms. McGraw and Ms. Horsburgh developed a friendship due to their mutual unsatisfactory experiences with the Thormans. Ms. McGraw learned that Ms. Horsburgh and others had successfully sued Mr. Thorman (or his companies) in the Ontario Small Claims Court.

[26] In her Supplementary Motion Record, McGraw relies on the transcript from Ms. Horsburgh’s successful Small Claims Court action against Mr. Thorman and his company Ottawa Design and Build. The transcript referred to Ms. Horsburg’s contract with Thorman, having a penalty clause of $25,000.00 if she made a negative review but it is hearsay evidence. On cross-examination, Mr. Thorman took under advisement, and subsequently refused, to produce a copy of Ms. Horsburg’s contract with the $25,000 penalty clause.

[27] Ms. McGraw also corresponded with the Rodneys and learned that they too had been threatened with litigation by the Thormans. On cross-examination, Mr. Thorman refused to admit if he had also sent a cease and desist letter to the Rodneys.

[28] On August 27, 2019, the Thormans issued nearly identical Statements of Claim against Ms. McGraw and Ms. Horsburgh, claiming approximately $500,000 in damages for defamation in each action.

[29] In their Statement of Claim, the Thormans allege, among other things, that McGraw’s Post was diverting business, viewers, sponsors and other opportunities away from the Thormans and/or their YouTube channels. However, the Thormans have failed to provide any evidence to support these allegations or to demonstrate that they have suffered any harm, monetary or otherwise.

[30] Viewership for Mr. Thorman’s Home RenoVision DIY has climbed steadily since the Post. In 2019, Home RenoVision DIY had 700,000 subscribers, by September 30, 2020 it had 1.32 million subscribers and by January 29, 2021, it had 1.56 million subscribers.

[31] The Thormans earn revenues from advertisements as part of a partnership agreement with YouTube. Mr. Thorman refused to disclose his partnership agreement with YouTube suggesting that it was publicly available, but this is not the case. Mr. Thorman further refused to disclose his revenues from YouTube and failed to provide any financial records for his businesses from 2016 onwards.

[32] Mr. Thorman posted a video on August 11, 2020 to Home RenoVision DIY titled “I will never do a paid sponsorship again and here is why”. The reasons are entirely unrelated to Ms. McGraw’s Post.

[33] The Thormans have not presented any evidence of any harm they have suffered as a result of McGraw’s Post. The Thormans ceased operating Thorman Reno Inc. and Ottawa Design and Build long before the Post. The Thormans have also not provided any evidence that their YouTube businesses has been negatively affected to any significant degree, or at all as a result of her Post. Moreover, many other dissatisfied customers had also expressed similar negative views on social media and in publicly available court proceedings about the Thormans’ renovation businesse.

[34] In addition, Mr. Thorman acknowledged that Reddit was not a reliable source of information, stating: “The internet is full of junk and your client is an example of the kind of junk that gets on the internet”. Mr. Thorman categorically denied that he would believe everything he read on Reddit.

Analysis

[35] The issue to be decided is as follows:

1. Should the Thormans’ defamation claim be dismissed under s. 137.1 of the Courts of Justice Act?

[36] The purposes of the anti-SLAPP provisions are set out in s. 137.1(1) of the CJA as follows:

1. The purposes of this section and sections 137.2 to 137.5 are,

(a) to encourage individuals to express themselves on matters of public interest;

(b) to promote broad participation in debates on matters of public interest;

(c) to discourage the use of litigation as a means of unduly limiting expression 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. 2015, c. 23, s. 3.

[37] The applicable provisions set out in s. 137.1 of the CJA are as follows:

(3) On motion by a person against whom a proceeding is brought, a judge shall, subject to subsection (4), dismiss the proceeding against the person if the person satisfies the judge that the proceeding arises from an expression made by the person that relates to a matter of public interest.

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

(a) there are grounds to believe that,

(i) the proceeding has substantial merit, and

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

(b) the harm likely to be or have been suffered by the responding party as a result of the moving party’s expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression.

[38] A defendant making the motion must first persuade the judge on a balance of probabilities that the claim “arises from an expression made by that person that relates to a matter of public interest”. If they fail to meet this test, then the motion is dismissed. If the defendant meets the threshold in s. 137.1(3), then the onus shifts to the plaintiff responding to the anti-SLAPP motion to persuade the judge that there are grounds to believe, namely a basis in the record and the law that:

i. The lawsuit has substantial merit;

ii. The defendant has no valid defence; and

iii. The harm likely to be or which has been suffered by the plaintiff as a result of the defendant’s expression “is sufficiently serious that the public interes in permitting the proceeding to continue outweighs the public interest in protecting that expression”.

[39] In 1704604 Ontario Ltd. v Pointes Protection Association, 2020 SCC 22, at para. 11, the Supreme Court stated that s. 137.1 of the CJA was meant to function to screen out lawsuits that unduly limit expression on matters of public interest.

Defendant’s Onus

Expression on a Matter of Public Interest (s. 137.1(3))

[40] In the Pointes decision at paras. 26-31, the Supreme Court stated that the “public interest” was a broad concept that was not synonymous with what interests the public; it is enough that some segment of the community would have a genuine interest in receiving information on the subject.

[41] Online consumer reviews are expressions of public interest and are worthy of protection even if accompanied by personal attacks.

[42] I am satisfied that McGraw’s Post was an expression that was related to a matter of public interest, namely to the segment of the public that were contemplating a home renovation who would have an interest in information about an untrustworthy contractor. As a result, I am satisfied that McGraw has met her onus on a balance of probabilities.

Does the Lawsuit have Substantial Merit (s. 137.1(4)(a)(i))

[43] The burden is on the Thormans to show that there are grounds to believe, namely a basis in fact and in law that their claim has substantial merit and that McGraw has no valid defence. In Pointes, the Supreme Court stated that the standard required more than mere suspicion but was less than on a balance of probabilities. The Thormans must show that their claim has “a real prospect of success”, namely that their claim is “legally tenable and supported by evidence that is reasonably capable of belief”.

[44] McGraw’s Post on Reddit included the following statements: “It’s scary that these two fraudsters, Jeff Thorman and Michelle Thorman, are still around”; “They have ripped off so many people in the Ottawa area, leaving homeowner’s houses demolished and running away with their hard earned money”; “Obviously some decent work is being done between scams…”; “I have absolutely nothing to gain by this post but my hope (is) to warn others”; and “anyone can post positive or negative company reviews but to protect fellow homeowners and drive the scammers out please continue to share your experiences with other!”

[45] To be found defamatory, a statement must lower the Thormans’ reputations in the eyes of a reasonable person. I find that publishing a statement alleging that someone is a “fraudster”, “has ripped off people” and “has scammed people” would reduce their reputations in the eyes of a reasonable person and the Thormans’ claim of defamation has a real prospect of success.

[46] As a result, I find that the Thormans’ claim for defamation has substantial merit; namely that there is a basis on the record and the law and meets the threshold set out in s. 137.1(4)(a)(i).

Have the Thormans Shown that McGraw has no Valid Defence? (s. 137.1(4)(a)(ii))

[47] McGraw submits that the defences of justification (the truth), fair comment and qualified privilege are available to her in the circumstances. On this motion, the court must engage in a limited weighing of the merits of the claim and cannot make any ultimate determination on credibility or the merits.

[48] In this case, McGraw entered into a contract with the Thormans to renovate her bathroom. Mr. Thorman was late in commencing the work due to taking a trip to attend a trade show that he had planned, and McGraw failed to decide on the fixtures and tiles to be purchased by the agreed date.

[49] The relationship between the parties broke down when Mr. Thorman advised Ms. McGraw that the costs for the fixtures would be approximately $12,000 rather than the $5,000 that he had originally estimated. Ms. McGraw believed she would be able to purchase her fixtures through Thorman and obtain the contractor’s discount of approximately 20%. She checked the prices quoted by Thorman for two of the items from Home Depot and discovered to her surprise that Thorman had marked up the shower fixture by approximately 230%. McGraw could buy the shower fixture she chose for $466.81 and Thorman planned to charge $1,435.00 for the same item. This also occurred with the sink faucets, where Thorman planned to charge $1,520.00 instead of $628.39, the cost at Home Depot.

[50] After McGraw presented Thorman with evidence of his inflated price, he never returned to perform any more work on the project. McGraw then cancelled the contract. Thorman kept the $5,490.00 deposit and submitted an invoice to McGraw for an additional $4,873.40.

[51] The Thormans submit that McGraw breached the renovation contract by failing to choose the fixtures in a timely manner and that they were entitled to keep the $5,490 as an estimate of their lost profit on the project. It is not possible to decide who breached the contract in this proceeding as both parties’ positions are legally tenable and have a basis in fact and in law.

Does the Defence of Justification Apply?

[52] In Grant v. Torstar Corp., 2009 SCC 61, at para. 33, the Supreme Court held that if satisfied that the words are defamatory, they are presumed to be false. As a result, McGraw must prove that her statement that the Thormans were fraudsters was substantially true. The allegation of fraud is a serious allegation to make. McGraw will have a heavy onus to prove that the Thormans committed fraud based on the facts set out and as a result she is unlikely to succeed on this defence.

Does the Defence of Fair Comment Apply?

[53] In WIC Radio Ltd. v. Simpson, [2008] 2 S.C.R. 420, 2008 SCC 40, at para. 28, the Supreme Court held that to succeed on a defence of fair comment, a defendant must show that their statements:

a) Deal with a matter of public interest;

b) Are based on fact;

c) Are recognizable as comment, although they can include inferences of fact;

d) Must show that any person could honestly express the opinion at issue on the proved facts; and

e) That the comments were not deliberately malicious.

[54] I find that in the circumstances, the Thormans have shown that McGraw’s defence of fair comment does not have a real prospect of success. McGraw’s statement that the Thormans were “fraudsters” is expressed as an allegation of fact and is not recognizable as an expression of opinion or comment.

Does the Defence of Qualified Privilege Apply?

[55] Ms. McGraw did not have a legal, social, moral or personal duty to publish the Post to the world at large on the internet and the persons receiving her publication did not have a corresponding duty to receive it. Qualified privilege is also defeated by malice. McGraw expressed her desire “to drive the scammers out”, which indicates an intention to cause harm to the Thormans’ business, namely, to drive them out of business. This is evidence of malice as it shows an intention to cause harm.

Is the harm suffered by the Thormans as a result of McGraw’s Post sufficiently serious that the public interest in allowing the proceeding to continue outweighs the public interest in protecting that expression? (s. 137.1(4)(b))

[56] Section 137.1(4)(b) requires a weighing of whether the potential harm to the plaintiff is sufficiently serious that the public interest in allowing the claim to proceed outweighs the public interest in protecting McGraw’s expression.

[57] The following evidence indicates that the Thormans have taken actions to silence critics, which is a hallmark of a SLAPP lawsuit:

a) They have sued McGraw for $525,000 for damages, which is a large sum which would deter criticism;

b) They have also sued Ms. Horsburg with an almost identical statement of claim for a similar amount;

c) I draw an adverse inference from Thorman’s refusal to provide a copy of Ms Horsburg’s contractthat the Thormans’ contract with Ms. Horsburg contained a penalty clause of $25,000 for any negative review; and

d) The Thormans did not pursue this action diligently as they waited nearly 22 months after the Post to commence their action.

[58] I find that the Thormans have not met their onus to show that they have suffered any harm from McGraw’s expression in her Post and the public interest in allowing their defamation claim to proceed is outweighed by the public interest in protecting McGraw’s expression to warn fellow homeowners about unreliable contractors for the following reasons:

a) The Thormans discontinued their renovation business under Thorman Reno Inc. in 2015, approximately two years before McGraw published her Post on Reddit in October of 2015, and as a result, McGraw’s Post did not cause any harm to their renovation business;

b) After dissolving Thorman Reno Inc., the Thormans started up business under the name of Ottawa Design and Build. They ceased operating this business in 2017, again before McGraw published her Post and as a result, this business me did not suffer any harm from her Post;

c) When asked why he dissolved Thorman Reno Inc., Mr Thorman stated that his “business model wasn’t about trusting clients to send him referrals” which indicates that his business did not suffer any serious harm;

d) Mr. Thorman acknowledged that Reddit was not a reliable source of information and denied that he would believe everything he read on Reddit;

e) Since 2017, Mr. Thorman has focused his efforts on three YouTube channels; “Home RenoVision DIY”, “Reality RenoVision” and “Home RenoVision en Español”. Viewership for Mr. Thorman’s Home RenoVision DIY YouTube channel has grown steadily from 700,000 subscribers in 2019, 1.32 million subscribers as of September of 2020 and 1.56 million subscribers as of January 29, 2021. The increase in subscribers is evidence that McGraw’s Post has caused minimal, if any, harm to Thorman’s YouTube business;

f) Mr. Thorman refused to answer questions on cross-examination about the revenues generated by his YouTube broadcasts or to provide any financial records concerning his business from 2016 onwards. I draw an adverse inference from Mr. Thorman’s refusal to answer these relevant questions and infer that the Thormans have not suffered any financial loss from McGraw’s Post, as the evidence is that their YouTube business is thriving; and

g) While publishing an allegation that the Thormans were fraudsters and scammers is a defamatory statement and is not appropriate language to be used in a Post, the Thormans have not presented any evidence that McGraw’s Post has caused them any financial harm. As a result, any damages awarded to them in their defamation action would be nominal in any event. The public interest in allowing the Thormans’ defamation claim to continue is exceeded by the public interest in protecting McGraw’s expression and the public interest to provide a negative consumer review of the Thormans’ former renovation business.

Disposition on Issue of Weighing Seriousness of Harm and of Public Interest of Protecting the Expression (s. 137.1(4)(b))

[59] For the above reasons, I find that the Thormans have not met their burden of demonstrating that the harm suffered by them, if any, as a result of McGraw’s expression is sufficiently serious that the public interest in permitting their defamation proceeding to continue is outweighed by the public following interest in protecting McGraw’s public expression of posting a consumer review to protect homeowners from unreliable contractors. As a result, the Thormans’ action against McGraw is dismissed.

Costs

[60] McGraw shall have 20 days to make submissions on costs. The Thormans shall have 20 days to respond and Ms. McGraw shall have 10 days to reply.

Released: November 19, 2021

COURT FILE NO.: CV-19-81239

DATE: 20211119

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

JEFF THORMAN and MICHELLE THORMAN

Plaintiffs (Responding Parties)

– AND –

KRISTA McGRAW

Defendant (Moving Party)

reasons for DECISION

R. Smith J.

Released: November 19, 2021