COURT FILE NOs.: CV-17-587463-00Cl and CV-18-593156-00CL

DATE: 20211202

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

THE CATALYST CAPITAL GROUP INC. and CALLIDUS CAPITAL CORPORATION

Plaintiffs

– and –

WEST FACE CAPITAL INC., GREGORY BOLAND, M5V ADVISORS INC., C.O.B. ANSON GROUP CANADA, ADMIRLTY ADVISORS LLC, FRIGATE VENTURES LP, ANSON INVESTMENTS LP, ANSON CAPITAL LP, ANSON INVESTMENTS MASTER FUND LP, ACF GP, MOEZ KASSAM, ADAM SPEARS, SUNNY PURI, CLARITYSPRING INC., NATHAN ANDERSON, BRUCE LANGSTAFF, ROB COPELAND, KEVIN BAUMANN, JEFFREY MCFARLANE, DARRYL LEVITT, RICHARD MOLYNEUX, GERALD DUHAMEL, GEORGE WESLEY VOORHEIS, BRUCE LIVESEY and JOHN DOES #4-10

Defendants

AND BETWEEN

WEST FACE CAPITAL INC. and GREGORY BOLAND

Plaintiffs by Counterclaim

– and –

THE CATALYST CAPITAL GROUP INC., CALLIDUS CAPITAL CORPORATION, NEWTON GLASSMAN, GABRIEL DE ALBA, JAMES RILEY, VIRGINIA JAMIESON, EMMANUEL ROSEN, B.C. STRATEGY LTD. D/B/A BLACK CUBE, B.C. STRATEGYUK LTD. D/B/A BLACK CUBE and INVOP LTD. D/B/A PSY GROUP

Defendants to the Counterclaim

AND BETWEEN

THE CATALYST CAPITAL GROUP INC. and CALLIDUS CAPITAL CORPORATION

Plaintiffs

– and –

DOW JONES AND COMPANY, ROB COPELAND, JACQUIE MCNISH and JEFFREY MCFARLANE

Defendants

Richard G. Dearden, Benjamin Na, Matthew Karabus, and Marco S. Romeo, for the Plaintiffs/Defendants by Counterclaim

David Moore and Ken Jones, for the Plaintiffs/Defendants by Counterclaim

Kent E. Thompson, Matthew Milne-Smith, Andrew Carlson, Maura O’Sullivan, and Anthony Alexander, for the Defendants/Plaintiffs by Counterclaim West Face Capital Inc. and Gregory Boland

Lucas E. Lung and Rebecca Shoom, for the Defendants ClaritySpring Inc. and Nathan Anderson

Dimitri Lascaris and A.J. Freedman, for the Defendant Bruce Livesey

Mark Wiffen, for the Defendants Daryll Levitt and Kevin Baumann

Phil Tunley, for the Defendant Rob Copeland

Jeffrey McFarlane, self-represented

Stacey Reisman, for the Defendants M5 Advisors Inc., c.o.b. Anson Group Canada, Admiralty Advisors LLC, Frigate Ventures LP, Anson Investments LP, Anson Capital LP, Anson Investments Master Fund LP, ACF GP, Moez Kassam, Adam Spears and Sunny Puri

Devin Jarcaig, for the Defendant Bruce Langstaff

Richard G. Dearden, Benjamin Na, Matthew Karabus, and Marco S. Romeo, for the Plaintiffs

Phil Tunley, for the Defendants Dow Jones and Company, Rob Copeland and Jacquie McNish

Jeffrey McFarlane, self-represented

HEARD: May 17, 18, 19, 20, 21, 2021

Table of Contents

PART I — INTRODUCTION.. 9

PART II — BACKGROUND.. 12

Previous Litigation between Catalyst and West Face. 12

The Catalyst Parties’ Out-of-Courtroom Conduct 12

The Moving Parties’ Out-of-Courtroom Conduct 16

PART III — THE LEGISLATION AND THE LAW... 19

Section 137.1 of the CJA.. 19

Section 137.1(3): The Threshold Burden. 20

Section 137.1(4)(a): The Merits-Based Hurdle. 21

Section 137.1(4)(b): The Public Interest Hurdle. 22

PART IV — THRESHOLD BURDEN ANALYSIS. 24

Discussion. 24

PART V — THE DEFAMATION ACTION.. 29

Section 137.1(4)(a)(i): Are there Grounds to Believe that the Defamation Action has Substantial Merit? 30

The Position of the Parties. 30

The Catalyst Parties. 30

The Dow Jones Defendants. 32

McFarlane. 33

Discussion. 33

Section 137.1(4)(a)(ii): Are there Grounds to Believe that the Dow Jones Defendants and McFarlane have no Valid Defences in the Defamation Action?. 37

Defence of Justification. 37

Defence of Fair Comment 39

Defence of Responsible Communication. 42

Defence of Qualified Privilege. 45

Defence Under the Libel and Slander Act, R.S.O. 1990, c. L.12, s .3(1) 45

Section 137.1(4)(b): The Public Interest Hurdle. 46

The Harm Analysis. 47

The Public Interest in Protecting the Impugned Expression. 48

The Weighing of the Public Interest 50

PART VI — THE WOLFPACK ACTION.. 52

(A) Defamation. 53

The Position of the Parties. 53

The Catalyst Parties. 53

(a) The First Set of Alleged Defamatory Statements. 53

(b) The Second Set of Alleged Defamatory Statements. 54

The Wolfpack Defendants. 55

Discussion. 55

(a) The First Set of Alleged Defamatory Statements. 55

Defence of Justification. 58

Defence of Fair Comment 58

Defence of Responsible Communication. 59

Defence of Qualified Privilege. 59

Defence of Absolute Privilege. 60

Conclusion. 60

(b) The Second Set of Alleged Defamatory Statements. 60

Defence of Justification (Baumann, Levitt, and McFarlane) 62

Defence of Fair Comment (Anderson, Baumann, Levitt, and McFarlane) 63

Defence of Responsible Communication (Anderson, Baumann, Levitt, and McFarlane) 63

Defence of Qualified Privilege (Anderson, Baumann, Levitt, and McFarlane) 63

Defence of Absolute Privilege (Baumann, Levitt, and McFarlane) 64

(B) Injurious Falsehood. 64

Elements. 64

(a) The Published Statements Must be Untrue. 64

(b) The Published Statements Must be Made Maliciously (i.e., Without Just Cause or Excuse) 65

The Position of the Parties. 66

The Catalyst Parties. 66

The Wolfpack Defendants. 67

Discussion. 67

(a) Copeland. 68

(b) McFarlane. 68

Elements. 71

(a) The Defendants Acted in Combination. 71

(b) The Predominant Purpose of the Defendants was to Intentionally Harm the Plaintiff. 71

Position of the Parties. 72

The Catalyst Parties. 72

The Wolfpack Defendants. 72

Discussion. 73

(D) Unlawful Means Conspiracy. 75

Elements. 75

(a) The Defendants Acted in Combination. 75

(b) The Defendants Committed Unlawful Acts. 75

(d) The Defendants Knew or Ought to Have Known that Injury to the Plaintiff was Likely to Occur from their Unlawful Act 76

(e) The Defendants' Unlawful Conduct in Furtherance of their Conspiracy Caused Harm to the Plaintiff. 76

Position of the Parties. 77

The Catalyst Parties. 77

The Wolfpack Defendants. 78

Discussion. 79

(E) The Unlawful Means Tort 82

Elements. 82

(a) The Defendant Must Have Intended to Injure the Plaintiff. 82

(b) The Interference Must Have Been by Unlawful Means. 83

Defence of Justification. 83

Position of the Parties. 84

The Catalyst Parties. 84

The Wolfpack Defendants. 84

Discussion. 84

The Public Interest Hurdle. 86

The Harm Analysis. 86

The Public Interest in Protecting the Impugned Expression. 87

The Weighing of the Public Interest 88

The Importance of the Expressions. 88

The History of the Litigation Initiated by the Catalyst Parties Against West Face and Others 89

Project Maple Tree. 90

The Financial and Power Imbalance. 91

The Damages Suffered by the Catalyst Parties. 91

The Potential Chilling Effect on Future Expressions. 92

Access to Justice. 92

Conclusion Regarding Public Interest Hurdle. 93

PART VII — THE WEST FACE PARTIES’ COUNTERCLAIM... 93

The Nature of the Motion. 94

Partial anti-SLAPP motions. 95

The Threshold Burden. 96

The Merits-Based Hurdle. 96

The August 2016 Written Statement 96

The October 2016 Press Release. 97

The First Investment Letter 97

The Second Investment Letter 98

Section 137.1(4)(a)(i) – Are there Grounds to Believe that the West Face Counterclaim has Substantial Merit?. 98

Section 137.1(4)(a)(ii): Are there Grounds to Believe that the Catalyst Parties Have no Valid Defences in the West Face Counterclaim?. 100

Defences Concerning the August 2016 Written Statement 100

Defences Concerning the October 2016 Press Release. 101

Defences Concerning the First Investment Letter 102

Defences Concerning the Second Investment Letter 102

The Public Interest Hurdle. 103

The Harm Analysis. 103

The Public Interest in Protecting the Impugned Expression. 104

The Weighing of the Public Interest 104

DISPOSITION.. 104

Appendix “A”. 106

REASONS FOR DECISION

MCEWEN, J.

[1] In 2015, Ontario amended the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”), by introducing ss. 137.1 to 137.5. These sections are generally referred to as the CJA’s “anti-SLAPP” provisions.

[2] The amendments were designed to deal with the harmful effects of strategic lawsuits against public participation (“SLAPPs”). SLAPPs were described by the Supreme Court of Canada in 1704604 Ontario Limited v. Pointes Protection Association, 2020 SCC 22, 449 D.L.R. (4th) 1, at para. 2, as lawsuits initiated by plaintiffs who use litigation not as a direct tool to vindicate a bona fide claim, but rather as an indirect tool to limit the expression of others. SLAPPs are merely a façade for the plaintiff, who is in fact manipulating the judicial system in order to limit the effectiveness of the opposing party’s speech or to deter that party (or other potential interested parties) from participating in public affairs.

[3] In these motions I am being asked to determine whether certain claims in three proceedings ought to be dismissed based on the provisions of s. 137.1. More specifically:

(i) certain defendants in Action No. CV-17-587463-00CL (the “Wolfpack Action”)[^1] seek to dismiss the action brought against them by the Catalyst Capital Group Inc. (“Catalyst”) and Callidus Capital Corporation (“Callidus”), (collectively the “Catalyst Parties”);

(ii) all defendants in Action No. CV-18-593156-00CL (the “Defamation Action”) seek to dismiss the action of the Catalyst Parties;

(collectively the defendants involved in these two anti-SLAPP motions will be referred to as the “Moving Defendants”);

(iii) in the Wolfpack Action, West Face Capital Inc. (“West Face”) and Gregory Boland (“Boland”), (collectively the “West Face Parties”) have commenced a Counterclaim against the Catalyst Parties (the “West Face Counterclaim”) and others. The Catalyst Parties seek the dismissal of four discrete claims brought by the West Face Parties for defamation, while conceding that the remainder of the defamation claims by the West Face Parties would continue.[^2]

[4] For the reasons that follow, given the exceptional circumstances of the Wolfpack Action and the Defamation Action, I grant the Moving Defendants’ motions in those cases. However, I dismiss the Catalyst Parties’ motion in the West Face Counterclaim.

PART I — INTRODUCTION

[5] The Catalyst Parties and West Face are significant players in the Canadian private equity and financing markets. The Catalyst Parties have commenced a number of lawsuits against the West Face Parties. These are outlined in greater detail below. The Catalyst Parties have also been engaged in other litigation with various other Wolfpack Action defendants.

[6] Generally speaking, both the Wolfpack Action and the Defamation Action find their genesis in three articles that were published by the Wall Street Journal (“WSJ”), as well as “tweets” that were later published by the WSJ reporter Robert Copeland (“Copeland”). The articles were generally based on whistleblower complaints that were filed with the Ontario Securities Commission (“OSC”). The Catalyst Parties take exception to these publications which repeat, amongst other things, accusations of fraud and other inappropriate financial dealings against them.

[7] The first article was posted on the WSJ website on August 9, 2017. Later that evening, a second online article was published. On August 10, 2017, the WSJ published a printed article in a slightly different form.

[8] The Catalyst Parties agree that the three articles are essentially the same. However, they take greater issue with the first article that was published on the WSJ website. That article and the second online article contained a photo of a Toronto Police Service vehicle and other details that were not included in the print article.

[9] For the purposes of these Reasons, I will therefore focus on the first website article (the “WSJ Article”).[^3] The WSJ Article contains all of the alleged defamatory comments contained in the subsequent online article (the “Online Article”) and the print article (the “Print Article”). The Catalyst Parties submit that the WSJ Article defamed them to an international audience of approximately 2.4 million readers. They further argue that the WSJ Article had a devastating effect on their businesses, including causing Callidus to suffer at least CAD $144-161 million in damage.

[10] The details surrounding these proceedings are convoluted and complex. They were comprehensively set out by Justice Boswell in a previous proceeding: The Catalyst Capital Group Inc. v. West Face Capital Inc., 2021 ONSC 125. I have also set out additional background facts in three previous endorsements: see The Catalyst Capital Group Inc. and Callidus Capital Corporation v. West Face Capital Inc. et al., 2021 ONSC 1140; The Catalyst Capital Group Inc and Callidus Capital Corporation v. West Face Capital Inc. et al., 2021 ONSC 1454; The Catalyst Capital Group Inc. and Callidus Capital Corporation v. West Face Capital Inc. et al., 2021 ONSC 1191. I will borrow, as necessary, from those decisions as I set out the background facts germane to these motions.

[11] The motions were argued over five days. Of significance is the fact that in advance of the motions, over 30,000 documents were produced, in addition to over 9,000 pages of affidavits and exhibits. Obviously, it is not possible to reference all of the documents delivered for these motions or every argument raised. In any event, it would be improper to do so in the context of these motions given the Supreme Court of Canada’s direction precluding a deep dive into the full factual record.

[12] In order to simplify these Reasons, I will first identify and provide a brief description of the parties who participated in these motions along with their principal players:

• Catalyst is a private equity firm specializing in investments in distressed and undervalued entities. Callidus is an asset-based lender that provides financing to companies that cannot obtain financing from traditional lending sources. Callidus traded on the TSX from April 2014 to November 2019, when it was then taken private by Catalyst pursuant to a court approved Plan of Arrangement. While Callidus was a publicly traded company, a number of Catalyst Funds held, in the aggregate, a majority of the shares in Callidus.

• Newton Glassman (“Glassman”) is a co-founder and Managing Partner of Catalyst and was formerly the Executive Chairman and Chief Executive Officer of Callidus.

• James Riley (“Riley”) is a Managing Director of Catalyst and was its Chief Operating Officer until his retirement. Riley was also an Officer and Director of Callidus until 2019 when Callidus went private.

• West Face is a private equity investment firm. Gregory Boland (“Boland”) is its Chief Executive Officer (collectively the “West Face Parties”).

• Dow Jones and Company owns the WSJ, the media company which employs Copeland and Jacquie McNish (“McNish”) (collectively the “Dow Jones Defendants”). Copeland and McNish are the reporters that authored the WSJ Article.

• Nathan Anderson (“Anderson”) is a US business analyst, a professional short seller, and a whistleblower.[^4] He is the principal of ClaritySpring Inc. (collectively the “Anderson Defendants”). Anderson prepared two whistleblower complaints that were forwarded to the OSC. Anderson also forwarded them to Copeland. Anderson’s whistleblower complaints formed two of the four whistleblower complaints referenced in the WSJ Article (collectively the “Whistleblower Complaints”).[^5] Only the Anderson Defendants’ Whistleblower Complaints, however, were quoted from in the WSJ Article.

• Kevin Baumann (“Baumann”) is the former president of Alken Basin Drilling Inc. (“Alken”), a borrower of Callidus. Baumann guaranteed loans made by Callidus to Alken. Baumann is now being sued by Callidus on his guarantee.

• Jeffrey McFarlane (“McFarlane”) is the former president and Chief Executive Officer of Xchange Technology Group (“XTG”), a borrower of Callidus. McFarlane guaranteed the XTG loan and was successfully sued by Callidus on the guarantee. McFarlane is quoted in the WSJ Article. McFarlane also filed a whistleblower submission with the OSC, which is briefly referenced in the WSJ Article.

• Darryl Levitt (“Levitt”) is a Toronto-based corporate lawyer who invested in a company that entered into a loan agreement with Callidus. He, too, is being sued on a guarantee he made to Callidus. Levitt also filed a whistleblower submission with the OSC, which is also briefly referenced in the WSJ Article.

• Bruce Livesey (“Livesey”) is a freelance journalist who co-authored two articles about the Catalyst Parties and Glassman. Livesey’s articles were not referenced in the WSJ Article.

[13] In the Wolfpack Action there are several additional defendants not referenced above. However, only the above defendants – i.e., the West Face Parties, Copeland, the Anderson Defendants, Baumann, McFarlane, Levitt, and Livesey (collectively, the “Wolfpack Defendants”) – have brought anti-SLAPP motions. The remaining defendants did not participate in the anti-SLAPP motions and are therefore only briefly referenced, as needed, in these Reasons.

PART II — BACKGROUND

Previous Litigation between Catalyst and West Face

[14] As alluded to above, the Catalyst Parties/Glassman and the West Face Parties are longtime business and legal adversaries. The Catalyst Parties and the West Face Parties have been involved in years of acrimonious litigation, initiated by the Catalyst Parties.

[15] Previously, both Catalyst and West Face were interested in purchasing WIND Mobile Corp. (“WIND”), a wireless telecommunications provider. West Face and a consortium of other investors were able to provide a more attractive offer than Catalyst and, consequently, ended up acquiring WIND. They then sold WIND to another party, realizing a $1.3 billion profit in the process. Catalyst took issue with West Face’s conduct in relation to the WIND transaction and, in 2014, sued West Face and several other parties for what it perceived to be improper conduct on their behalf (the “Moyse Action”). This action was dismissed by Justice Newbould in August 2016.

[16] In June 2015, the Catalyst Parties issued a second claim against West Face, as well as an independent equity research firm (the “Veritas Action”). The Catalyst Parties alleged that the defendants in this action published defamatory statements about Callidus with the intention of driving down its share value so that they could profit from short selling Callidus stock. The Veritas Action has not proceeded past the stage of exchanging affidavits of documents and has not been pursued by the Catalyst Parties for approximately five years.

[17] In May 2016, Catalyst initiated a third claim against the West Face Parties (and several other defendants). This claim alleged a conspiracy with respect to the sale of WIND (the “VimpelCom Action”). In April 2018, Justice Hainey held that the issues in the VimpelCom Action were similar to those at issue in the Moyse Action and that, as a result, the former was barred on the basis of issue estoppel, cause of action estoppel, and abuse of process.

[18] The Catalyst Parties appealed Justice Newbould’s decision, as well as Justice Hainey’s decision, to the Court of Appeal for Ontario. At the Court of Appeal, both appeals were dismissed. The Catalyst Parties filed motions for leave at the Supreme Court of Canada, which were denied.

The Catalyst Parties’ Out-of-Courtroom Conduct

[19] While some of the above referenced litigation was still ongoing, the Catalyst Parties were also engaged in extensive operations aimed at tilting the litigation landscape in their favour.

[20] The best place to start to understand the nature of the Catalyst Parties’ out-of-courtroom conduct is August 2016, which is the month Justice Newbould dismissed the Moyse Action. As described by Justice Boswell (see Justice Boswell’s Reasons, at paras. 53-106), the Catalyst Parties took exception to Justice Newbould’s ruling – particularly his unflattering observations about Glassman’s testimony and overall lack of credibility – and began to publicly accuse Justice Newbould, amongst other things, of having displayed “severe indications of possible bias”.

[21] In Summer 2017, Glassman claims that he developed concerns that he, his family, and business partners were under attack by various unknown persons (see Justice Boswell’s Reasons, at para. 55). According to Glassman, these concerns stemmed, in part, from the publication of the WSJ Article on August 9, 2017. As described below, it seems that the Catalyst Parties’ lack of success in the Moyse and VimpelCom Actions also played a role.

[22] Glassman’s fears were exacerbated, at least initially, on August 11, 2017, when he received an email from someone named “Vincent Hannah”. Mr. “Hannah” advised Glassman, amongst other things, that a “cabal of conspirators” caused the publication of the WSJ Article and that a group of investment funds were targeting Callidus and Glassman. The cabal reportedly included the West Face Parties, as well as some of the other defendants in the Wolfpack Action. Of interest, however, is that the Catalyst Parties immediately knew that “Vincent Hannah” was a pseudonym and, within a few weeks, knew that the true author of the email was an investor by the name of Danny Guy (“Guy”). Although Guy later told the Catalyst Parties that an investigator Derrick Snowdy (“Snowdy”) could substantiate the allegations he made in his email, the Catalyst Parties determined that neither Guy nor Snowdy possessed any substantiating documentation. In a now infamous email, dated October 7, 2017, Glassman wrote that the information provided by Snowdy was “less valuable than what my dogs left for me on our lawn this [morning].”

[23] Nevertheless, Glassman claims that he still had fears that various parties – including the West Face Parties – might be trying to harm him. Given Justice Newbould’s critical comments in the Moyse Action, Glassman also appears to have had a misplaced concern that Justice Newbould held biases against him. He therefore reached out to a man named Yossi Tanuri (“Tanuri”), a friend of Glassman’s who served in a commando unit in the Israeli Defence Forces. At the time Glassman contacted him, Tanuri was operating an investigation and security company called Tamara Global (“Tamara”).

[24] The purpose of Glassman’s meeting with Tanuri was to determine whether he could help him obtain information about the West Face Parties, Justice Newbould, and various other parties who Glassman thought might be acting against him. As it turns out, Tanuri did have the resources necessary to assist Glassman. On August 31, 2017, Glassman thus had one of Catalyst’s lawyers formally retain Tamara on behalf of Catalyst.

[25] Tamara then engaged additional companies – namely, B.C. Strategy Ltd. d/b/a Black Cube, B.C. Strategy UK Ltd. d/b/a Black Cube (collectively “Black Cube”) and Invop Ltd. d/b/a Psy Group (“Psy Group”) – to assist with intelligence gathering. Black Cube is a private investigation firm based in Israel comprised of former members of the Israeli Defence Force and the Mossad (the latter being the national intelligence agency of Israel). Now insolvent, Psy Group was an Israeli public relations firm known for, amongst other things, its ability to spread misinformation. Its motto was, “Shape Reality.”

[26] Shortly after committing Catalyst to a retainer agreement with Tamara, on September 6, 2017, Glassman flew to London, England to meet with representatives of Black Cube. The next day, Black Cube emailed Tanuri a draft Letter of Engagement providing for the payment of a $1.5 million USD base fee to Black Cube, as well as additional “success fees”.

[27] Neither the amount of the “success fees” nor the circumstances in which they were payable were spelled out in the original Letter of Engagement. In the days that followed, Glassman filled in this gap. He did this by asking Rocco DiPucchio (“DiPucchio”), counsel at Catalyst’s law firm at the time, to email him a “Wish List of Evidence/Information” that he regarded as important in prosecuting the various pieces of litigation that the Catalyst Parties were pursuing against the West Face Parties. Glassman then created a handwritten, five tiered “Bonus Legend”, and applied his bonus scheme to each item listed in DiPucchio’s email. Glassman’s handwritten Bonus Legend and markup of DiPucchio’s email were incorporated as “Annex A” to the executed version of Black Cube’s Letter of Engagement, dated September 11, 2017.

[28] According to Glassman’s handwritten notes, Black Cube was to be paid $75,000 USD “per item” if its operatives could obtain evidence that Justice Newbould:

• was bias[ed] against Catalyst [or] Glassman;

• was an anti-Semite;

• had a “deal” with West Face for his decision in the Moyse Action;

• had some other “inappropriate connection” to West Face or Boland; or

• had a “deal” with the law firm Justice Newbould moved to following his retirement from the bench.

[29] Black Cube was only given until September 20, 2017 to obtain this evidence due to the fact that the Court of Appeal was scheduled to hear Catalyst’s appeal of the Moyse Action on September 26 and 27, 2017.

[30] Incentivized by Glassman, Black Cube operatives went to work. They quickly placed Justice Newbould under extensive surveillance, following him to various places — including his Bay Street office, home, and a dry-cleaning store.

[31] On September 18, 2017, operatives from Black Cube went a step further and attempted to execute a “sting” on Justice Newbould. Pursuant to this “sting”, a Black Cube operative posed as a prospective client interested in retaining Justice Newbould to conduct a private arbitration. The operative managed to arrange two meetings with Justice Newbould, both on September 18th, in which he unsuccessfully sought to entrap Justice Newbould into making anti-Semitic comments. Both meetings were surreptitiously recorded by the operative without Justice Newbould’s knowledge.

[32] This was not the only “sting” operation Black Cube operatives were working on concerning Justice Newbould. A second “sting”, to take place at Justice Newbould’s golf club, was also planned. The plan envisioned a Black Cube operative entrapping an associate golf professional there and then arranging for a golf outing with Justice Newbould, where another effort would be made to entice him into making inappropriate comments. For whatever reason, the planning fell through.

[33] As Justice Boswell’s Reasons make clear, Justice Newbould was not the only one being subjected to Black Cube “sting” operations. The Catalyst Parties, through their operatives, also targeted a number of West Face’s current and former employees, including Moyse, Alexander Singh (“Singh”), and Bei Huang Yujiazhu. Singh in particular was aggressively pursued. Black Cube agents posing as recruiters for an Eastern European private equity firm indicated an interest in “hiring” Singh. Black Cube agents went so far as to meet with Singh in Toronto and subsequently flew him to London, England to meet again. There, he was questioned about the hiring of Moyse, as well as the Moyse litigation more generally, in an effort to obtain evidence to support the Catalyst Parties’ appeal of the Moyse Action.

[34] Around the same time that these “sting” operations were unfolding, Glassman was also meeting with representatives of Psy Group, another company retained by Tamara. On September 14, 2017, Glassman flew to New York to meet with Phil Elwood (“Elwood”), a public relations consultant retained by Psy Group. Several Psy Group officials were also present at this meeting.

[35] Although Elwood initially undertook work for Glassman, he has sworn an affidavit on behalf of the West Face Parties for use in these motions. According to Elwood, the September 14 meeting lasted all day. During the first half of the meeting, Glassman voiced concerns that a “Wolfpack” of hedge funds were conspiring against him. During the latter half of the meeting, Royi Burstein (“Burstein”), Chief Executive Officer of Psy Group, responded to Glassman’s concerns by outlining a two-pronged operation known as “Project Maple Tree”. The first prong, dubbed the “white prong”, involved utilizing the media to generate positive publicity for Glassman and Catalyst. The second prong, dubbed the “black prong”, involved generating negative stories about the Wolfpack conspiracy, publishing negative information concerning the West Face Parties, and portraying Justice Newbould as corrupt and anti-Semitic. The above referenced “sting” operations were also components of Project Maple Tree.

[36] On September 16, 2017, two days after the New York meeting, Burstein circulated an email to several Psy Group agents outlining the finer details of Project Maple Tree. The email included instructions from Glassman that, “NOW or VERY SOON is the perfect time to hear/see ‘chatter’ on social media etc of rumors of an alleged Wolfpack, rumors of west face/anson partners[^6] involvement therein, rumors of 8 or more victims, rumors of boland being looked at (not yet criminal investigation) for criminality etc. [sic].” Soon after, a wave of accusations against the West Face Parties appeared on the internet and social media. These accusations claimed that the West Face Parties were involved in criminal misconduct, including racketeering, money laundering, and illegal stock manipulation.

[37] At around the same time that all of this was unfolding, Psy Group was also providing instructions to Virginia Jamieson (“Jamieson”), an independent public relations consultant based in New York City. On September 17, 2017, Psy Group sent Jamieson an email with the subject line, “The Story”. A proposed article, entitled “Judge Frank Newbould’s record might unravel September 20^th”, was attached to the email. The article was critical of Justice Newbould’s decision in the Moyse Action and suggested that he ignored various confidential documents provided by Moyse to West Face. It also suggested that Justice Newbould was biased.

[38] Two days later, on September 19, 2017, Jamieson emailed a document to Christie Blatchford (“Blatchford”), a journalist at the National Post. The document contained edited extracts from Justice Newbould’s ruling in the Moyse Action. Although Blatchford has since passed away, she swore an affidavit on May 21, 2019, outlining her involvement with Jamieson. In her affidavit, Blatchford states that she was provided with a USB flash drive containing edited portions of the recorded conversations between a Black Cube operative and Justice Newbould (referenced above). Blatchford goes on to depose that, on October 12, 2017, she met with Emmanuel Rosen (“Rosen”) of Psy Group, who encouraged her to publish a story portraying Justice Newbould as corrupt.

[39] Eventually, on November 24, 2017, Blatchford published a story concerning Justice Newbould. Rather than criticizing his conduct, however, the article discussed Catalyst’s dissatisfaction with the Moyse Action ruling, its hiring of Black Cube, and the “sting” perpetuated on Justice Newbould. Overall, the article is highly critical of Catalyst’s conduct.

[40] According to the Moving Defendants all of the aforementioned conduct constitutes powerful evidence of a malicious scheme devised by the Catalyst Parties, under the leadership of Glassman, to attack and discredit all those who oppose them. The West Face Parties, as noted, claim that these activities have caused them to sustain significant losses. The Moving Defendants further submit that it is ironic that the Catalyst Parties now complain about the WSJ Article after having engaged in an unprecedented and carefully orchestrated campaign to smear their perceived enemies, including a retired judge of the Superior Court of Justice, as criminals and racists. Last, the Moving Defendants stress that the Catalyst Parties’ alleged motive to commence Project Maple Tree came from the Vincent Hannah email, which the Catalyst Parties quickly determined was anonymously sent and unreliable. Nonetheless, they continued on with Project Maple Tree, which, in the words of Justice Boswell (with which I agree), was an “ethically dubious” endeavor.

The Moving Parties’ Out-of-Courtroom Conduct

[41] In or about the time the Moyse and Veritas Actions were being pursued, the Catalyst Parties allege that the defendants in the Wolfpack and Defamation Actions were involved in conspiratorial and defamatory activities against them.

[42] Around this time, generally in the spring of 2016, Baumann, McFarlane, Levitt, and others began discussing their grievances against the Catalyst Parties and Glassman. Some of them were in contact with Boland and West Face’s President, Philip Panet (“Panet”). West Face had made a previous complaint to the OSC regarding Catalyst in December 2014 and had been short selling Callidus shares in 2014 and 2015. At that time, Boland had also been discussing West Face’s OSC complaint with McNish, although nothing further occurred.

[43] Baumann, McFarlane, Levitt, and others also discussed whether actions should be brought against the Catalyst Parties and approached US law firms in this regard. They also considered filing whistleblower complaints and publishing accusations against the Catalyst Parties via Twitter. Levitt, for one, in fact began tweeting in this regard.

[44] In or around this time frame, Anderson who had not yet become acquainted with the other Moving Defendants, began reviewing the online complaints against the Catalyst Parties and later became involved in the conversation with some of the defendants in the Wolfpack Action. Thereafter, numerous emails passed between Anderson and Levitt, McFarlane, and Baumann. They began working on a coordinated effort to not only file Whistleblower Complaints with the OSC, but to also contact the media. Anderson met with McFarlane and Levitt in Toronto and, in early 2017, there were various phone calls between Baumann, Anderson, and others.

[45] Beginning in 2015, Livesey, a licensed private investigator and journalist, also began conducting investigations into Callidus’ loan operations on behalf of the defendant, George Wesley Voorheis (“Voorheis”).[^7] In 2016 and 2017, the evidence reveals that Livesey was also speaking with the West Face Parties. Eventually, Livesey ended up selling an article concerning Callidus to the Southern Investigative Reporting Foundation (“SIRF”).[^8]

[46] With respect to Anderson’s whistleblower complaints, he filed the main complaint on May 22, 2017 and provided a supplemental submission on May 30, 2017. Around the same time, he also delivered similar versions of these submissions to the US Securities and Exchange Commission (the “SEC”), with which Callidus was listed.[^9]

[47] Anderson’s main whistleblower complaint is a 28-page document to which 73 attachments were affixed, many of which were generated by the Catalyst Parties or were contained in court filings. Anderson stated, amongst other things, that the Catalyst Parties had engaged in a scheme to artificially inflate the value of the assets and obscure asset impairments. He made allegations of fraud and noted that the Catalyst Parties were engaged in a “shell game” with respect to impaired assets, which misled investors as to the value of those assets.

[48] Anderson focused on a number of companies in his whistleblower complaints, including McFarlane’s company, XTG.

[49] In the weeks leading up to the publication of the WSJ Article, discussions amongst Anderson, Levitt, McFarlane, Langstaff, and other guarantors continued. West Face filed its own complaint with the OSC in April 2017. In addition, Levitt, McFarlane, Baumann, and others contacted the Toronto Police and disclosed their complaints. Although the Toronto Police asked them not to disclose their complaints publicly, some did so and reference to the police complaint was made in the WSJ Article.

[50] Ultimately, Anderson provided his whistleblower complaints to Copeland. Other Wolfpack Defendants simultaneously contacted other media outlets to see if they too would publish the results of the Whistleblower Complaints.

[51] Anderson, as per his business model, shorted Callidus stock, and on August 1, 2017 executed trades of Callidus stock and made a modest profit. After the WSJ Article was published, Anderson closed out his short position in Callidus, again making a modest profit. The evidence reveals that Voorheis and the Anson Defendants also made a profit from shorting Callidus around the time that the WSJ Article was published.

[52] In this motion, the Catalyst Parties do not object to the fact that Whistleblower Complaints, particularly Anderson’s whistleblower complaints, were made to the OSC and SEC. They submit, however, that the Whistleblower Complaints ought to have remained confidential. Instead, however, Anderson provided copies of his whistleblower complaints to Copeland and the Whistleblower Complaints, along with the interview Copeland conducted with McFarlane, formed the basis of the WSJ Article. The Catalyst Parties submit that this was all part of a well-designed scheme by adversaries of the Catalyst Parties, short sellers, and journalists to make defamatory expressions against the Catalyst Parties to drive down the share price of Callidus and profit through a “short and distort” campaign, being a tactic of publicizing negative information about a company and profiting from a short position taken against that company.

[53] The Catalyst Parties submit that the WSJ Article caused them significant harm. They rely upon two reports prepared by US experts. The first was prepared by Mark Sunshine, the Chief Executive Officer of MA Sunshine Capital, (the “Sunshine Report”). The second report was prepared by Vinita Juneja, Managing Director of NERA Economic Consulting (the “Juneja Report”). They both opine that the WSJ Article caused damage to Callidus.

[54] The Moving Defendants deny that any damages were sustained as a result of the WSJ Article. They submit that the Catalyst Parties’ losses were a direct result of Callidus’ reckless loan making practices which are confirmed, they say, in Callidus’ own “Strategic Review and Remediation Plan” prepared by its Interim Chief Executive Officer, Patrick Dalton, dated February 25, 2019 (the “Dalton Report”). They submit this is also reflected, in part, in Callidus’ poor Q2 report, which was released after the WSJ Article was published and which noted significant Q2 losses. They further rely upon an affidavit sworn by Callidus’ Chair of its Special Committee of Independent Directors, David Sutin (the “Sutin Affidavit”). The Sutin Affidavit is dated September 12, 2019 and was prepared during the privatization of Callidus. Both of these reports will be discussed in further detail in these Reasons.

[55] The Moving Defendants further point out that the OSC and the SEC shared the concerns set out in the Whistleblower Complaints. The OSC correspondence to Callidus is dated July 27, 2017 and July 16, 2018. In the July 2017 letter, the OSC identified a number of what it considered to be “deficiencies”, including a failure to identify material factors of assumption supporting unrecognized yield enhancements that formed part of Callidus’ $110.7 million valuation relating to one of its own companies, Bluberi Gaming Technologies Inc., a company identified by Anderson in his whistleblower complaints. They also point to the fact that, in general, unrecognized yield enhancements[^10] had been the source of ongoing friction between Callidus and the OSC.

[56] As also pointed out in the July 2018 letter, Catalyst was repeatedly placed on the OSC’s Refilings and Errors List. The OSC noted that “the frequency and nature of the Company’s refilings are concerning and may suggest a culture of noncompliance.”

PART III — THE LEGISLATION AND THE LAW

Section 137.1 of the CJA

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

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

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

(iii) to discourage the use of litigation as a means of unduly limiting expression on matters of public interest; and

(iv) to reduce the risk that participation by the public in debates on matters of public interest will be hampered by fear of legal action.

[58] The legislation is meant to function as a mechanism to screen out lawsuits that unduly limit expression on matters of public interest through the identification and pretrial dismissal of such actions: Pointes, at para. 16.

[59] With respect to the motion itself, the relevant portions of s. 137.1 are as follows:

(3) On a 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.

[60] As noted in Bent v. Platnick, 2020 SCC 23, 449 D.L.R. (4th) 45, at para. 74, the companion ruling to Pointes, the two primary policy goals of s. 137.1 are: first, “to function as a mechanism to screen out lawsuits that unduly limit expression on matters of public interest through the identification and pretrial dismissal of such actions”, and second, to “also ensure that a plaintiff with a legitimate claim is not unduly deprived of the opportunity to pursue it”.

[61] The reconciliation of these two policy goals requires an analysis of a rather complex statutory framework set out in s. 137.1. Below, I provide an overview of the various elements underlying that statutory scheme.

Section 137.1(3): The Threshold Burden

[62] As set out in Pointes and Bent, the moving party (i.e., defendant) must first establish, on the balance of probabilities, that the proceeding “arises from an expression made by the person that relates to a matter of public interest.”

[63] As noted in Pointes, at para. 21, this is a two-part analysis. The burden is on the moving party to show that:

• the proceeding arises from an expression made by the moving party; and

• that the expression relates to a matter of public interest.

[64] The term “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 an entity.

[65] As noted in Pointes, at para. 25, “it is abundantly clear that ‘expression’ is defined expansively”.

[66] The Supreme Court of Canada has similarly emphasized that the words “arise from” in s. 137.1(3) should be given a broad and liberal interpretation and, critically, will be satisfied provided that “the expression is somehow casually related to the proceeding” (whether directly or indirectly): Pointes, at paras. 24, 102; Bent, at para. 80.

[67] The second prong of s. 137.1(3) requires the moving party to demonstrate, again on a balance of probabilities, that the expressions complained of relate to matters of public interest. Here, the Supreme Court has determined that the phrase “relates to a matter of public interest” should also be given a liberal, broad, generous, and expansive interpretation: Pointes, at paras. 26, 28, and 30; Bent, at para. 81. In Pointes, the Court explicitly noted the public has a genuine stake in knowing about many matters ranging across a variety of topics and that, therefore, courts must ask whether “some segment of the community would have a genuine interest in receiving information on the subject”: at para. 27.

[68] If the moving party meets its threshold burden under s. 137.1(3), the proceeding will then be dismissed unless, pursuant to s. 137.1(4), the responding party (i.e., plaintiff) can demonstrate:

(a) there are grounds to believe that there is (i) substantial merit to their claims and (ii) the moving party has no valid defence (the “Merits-Based Hurdle”); and

(b) establishes on a balance of probabilities that the harm likely to be or which has been suffered by them 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 the expression (the “Public Interest Hurdle”).

Section 137.1(4)(a): The Merits-Based Hurdle

[69] In considering the Merits-Based Hurdle, a plaintiff must satisfy the court that there are “grounds to believe” that there is substantial merit to their claims (per s. 137.1(4)(a)(i)) and that, furthermore, the defendant has no valid defences (per s. 137.1(4)(a)(ii)).

[70] In interpreting the words “grounds to believe”, the Supreme Court has held that there must be a basis in the record and the law, taking into account the stage of the litigation at which s. 137.1 motions are brought, for a finding that the underlying proceeding has “substantial merit” and that the moving party has no valid defence: Pointes, at para. 39. The Court went on to adopt the wording of its earlier decision in Mugesera v. Canada (Minister of Citizenship and Immigration), 2005 SCC 40, [2005] 2 S.C.R. 100, at para. 114, that this standard requires “something more than mere suspicion but less than…proof on the balance of probabilities”: Pointes, at para. 40.

[71] As for the meaning of “substantial merit”, the Supreme Court in Pointes concluded that for an underlying proceeding to have substantial merit, it must have a real prospect of success - in other words, a prospect of success that, while not amounting to a demonstrated likelihood of success, tends to weigh more in the plaintiff’s favour: at para. 49. The Court went on to state that when read in context of the “grounds to believe” standard, this means that the motion judge must be satisfied that there is a basis in the record and in the law – taking in account the stage of the proceeding – for drawing such a conclusion. This, in turn, requires the claim to be legally tenable and supported by evidence reasonably capable of belief: Pointes, at para. 49.

[72] Importantly, the Court in Pointes, at para. 52, stressed that, in light of the above, it is important to recognize how s. 137.1 motions differ from summary judgment motions. Unlike judges hearing summary judgment motions, Pointes, at para. 52 stresses that judges hearing s. 137.1 motions must only engage in a limited weighing of the evidence and must defer ultimate assessments of credibility and other questions requiring a “deep dive” into the evidence to a later stage, where pleadings are more fully developed and judicial inquiry powers are broader. Although preliminary assessments of credibility are permissible, s. 137.1(4)(a)(i) does not allow for an adjudication of the merits of the underlying proceeding: Pointes, at para. 52.

[73] Insofar as the interpretation of “no valid defence” is concerned, the Supreme Court in Pointes held that it is not up to the plaintiff to anticipate every defence that may be raised by the defendant. Rather, the defendant must first “put in play” the defences it intends to rely on: at paras. 56-57.

[74] Once this is done, the plaintiff must establish that none of the defences put in play by the defendant are valid. More particularly, the plaintiff, who again bears the statutory burden at this stage, must show that there are grounds to believe that the defendant’s defences have no real prospect of success – that is, do not tend to weigh more in their favour: Bent, at para. 103. As with the substantial merit analysis, this is assessed from both a legal and factual perspective. In other words, the court must engage in a limited assessment of the evidence to consider whether the defences raised are legally tenable and supported by evidence reasonably capable of belief: Pointes, paras. 50, 52, 58-59, and 105-112; Bent, at paras. 117, 125, 131, and 188.

[75] Taken as a whole, s.137.1(4)(a) is fundamentally concerned with the strength of the underlying proceeding: Pointes, at para. 60.

Section 137.1(4)(b): The Public Interest Hurdle

[76] Section 137.1(4)(b) requires the responding party to show that the harm it has suffered (or is likely to suffer) 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 the underlying expression.

[77] Under s. 137.1(4)(b), the grounds to believe standard is replaced with the more onerous balance of probabilities standard: Pointes, at paras. 82, 103, and 126; Bent, at paras. 141, 174. This means that the responding party must demonstrate on a balance of probabilities that the harm they have suffered (or are likely to suffer) 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”: s. 137.1(4)(b).

[78] In conducting the analysis under s. 137.1(4)(b), the responding party must not only point to the existence of harm, but also evidence that such harm was caused by the moving party’s expression: Pointes, at para. 68. However, while pleaded claims should not be taken at face value nor bald assertions considered sufficient, the Court in Pointes stressed that fully developed damages briefs are not required: at para. 71. The Court did stress, however, that evidence of a causal link between the moving party’s expression and the responding party’s harm will be important where there may be alternative sources of the plaintiff harm: Pointes, at paras. 71-72.

[79] If the responding party can establish harm causally related to the expression at issue, s.137.1(4)(b) then requires them to show that the harm and corresponding public interest in permitting the proceeding to continue outweighs the public interest in protecting the moving party’s expression. At this stage, the quality of the moving party’s expression and the motivation behind it are relevant factors: Pointes, at para. 74. As the Supreme Court further held in Pointes, at paras. 75-76, while judges should be wary of descending into moralistic taste tests, the public interest in protecting speech will generally be diminished if the expression contains deliberate falsehoods or gratuitous personal attacks.

[80] In addition, the Court noted that the analysis at this stage is informed by its jurisprudence under s. 2(b) of the Canadian Charter of Rights and Freedoms. The Court further approved of comments made by the Court of Appeal for Ontario in Platnick v. Bent, 2018 ONCA 687, 426 D.L.R. (4th) 60, at para. 99, where Doherty J.A. recognized four indica of a “SLAPP suit” being: (1) a history of the plaintiff using litigation or the threat of litigation to silence critics, (2) a financial or power imbalance that strongly favours the plaintiff, (3) a punitive or retributory purpose animating the plaintiff’s bringing of the claim and, (4) minimal or nominal damages suffered by the plaintiff.

[81] It also highlighted some additional factors that may inform “the public interest weighing exercise under s. 137.1(4)(b)”: Pointes, at para. 78. Such factors include: (1) the importance of the expression, (2) the history of litigation between the parties, (3) broader effects on other expressions on matters of public interest, (4) the potential chilling effect on future expressions either by a party or by others, (5) the defendant’s history of activism in the public interest, (6) any distortion between the resources used in the lawsuit and the harm caused or the expected damages awarded, and (7) the possibility that the expression or the claim might provoke hostility against an identifiably vulnerable group or a group protected under s. 15 of the Charter or human rights legislation: Pointes, at para. 80.

[82] In its conclusion on s. 137.1(4)(b), the Supreme Court emphasized that the weighing exercise under s.137.1(4)(b) lies at the “core” of the s. 137.1 analysis: Pointes, at para. 82. As the Court emphasized earlier in its reasons, s. 137.1(4)(b) operates as a mechanism to screen out lawsuits that unduly limit expression on matters of public interest and serves as a “robust backstop” for motion judges to dismiss even technically meritorious claims if the public interest in protecting the expression giving rise to the proceeding outweighs the public interest in allowing the proceeding to continue: Pointes, at para. 62. The Court thus emphasized the importance of giving this provision due regard in assessing a SLAPP motion: Pointes, at para. 82.

PART IV — THRESHOLD BURDEN ANALYSIS

[83] Having set out the basis of the test and the guidance provided by the Supreme Court of Canada, I now apply s. 137.1 to the motions before me.

[84] The same expressions underlie both the Defamation and Wolfpack Actions. As a result, I will only conduct one Threshold Burden analysis.

[85] Given the different causes of action pleaded by the Catalyst Parties in the Wolfpack and Defamation Actions, however, the Merits-Based Hurdle and the Public Interest Hurdle will require separate analyses, which I will consider after I deal with the Threshold Burden.

[86] Last, I will conduct my analysis of the Catalyst Parties’ anti-SLAPP motion concerning the West Face Counterclaim.

Discussion

[87] For the reasons that follow, I find that the Moving Defendants have satisfied their burden under s. 137.1(3).

[88] As noted above, in conducting my s. 137.1(3) analysis I must have regard to two issues:

(i) Do the Wolfpack and Defamation Actions arise from an “expression” made by the Moving Defendants?

(ii) Does the expression relate to a matter of public interest?

I must also consider the following issue raised by the Catalyst Parties:

(iii) Does the fact that some of the Moving Defendants deny they were involved in WSJ Article preclude them from asserting that they made an expression?

[89] The first question can be answered with relative ease. The parties agree that both the Defamation and Wolfpack Actions arise from expressions. The expressions in issue are the WSJ Article and the Whistleblower Complaints referenced therein. Both of these clearly constitute an “expression” in light of Pointes.

[90] With respect to the second question, however, the Catalyst Parties submit that the above referenced expressions do not relate to a matter of public interest. During oral argument, the Catalyst Parties clarified that they were not advancing an argument similar to the one accepted by the Court of Appeal for Ontario Grist v. TruGrp Inc., 2021 ONCA 309. There, the Court of Appeal found that the impugned expressions arose out of a fundamentally private dispute involving several parties – none of which were publicly-traded corporations. Instead, the Catalyst Parties advised that they were taking the position that expressions at issue do not “relate to” a matter of public interest but, rather, merely “makes reference” to a matter of public interest.

[91] In advancing this argument, the Catalyst Parties place great weight on the fact that the Whistleblower Complaints were initially provided to the OSC pursuant to its formal Whistleblower Program. The Catalyst Parties stress that the OSC Whistleblower Program is highly confidential in that whistleblower submissions are neither disclosed to the public nor accessible by members thereof. In addition, the Catalyst Parties point out that the confidential allegations contained in the Whistleblower Complaints never proceeded beyond the intake or inquiry stage (i.e., they did not lead to a formal proceeding with the OSC). Taken together, then, the Catalyst Parties submit that while the public may be curious in learning that confidential Whistleblower Complaints have been filed against the Catalyst Parties and that, furthermore, the OSC was inquiring into these complaints, such expression does not relate to a matter of public interest.

[92] The Catalyst Parties’ argument contains two fatal flaws. The first has to do with one of its premises. As noted above, the Catalyst Parties submit that whistleblower complaints submitted pursuant to the OSC Whistleblower Program are highly confidential. Nothing, however, legally prevents whistleblowers from making their complaints public. Indeed, during oral argument, the Catalyst Parties could not point to a single legislative or regulatory provision supporting their submission that whistleblower complaints must remain confidential. Although they did reference an OSC inter-office memorandum instructing staff to keep whistleblower complaints confidential,[^11] this instruction in no way prevents whistleblowers themselves from disclosing their complaints to the public. While the Catalyst Parties attempt to define the expression at issue as being highly confidential in nature – such that it may not be said to relate to a matter of public interest – the evidence filed on this motion does not support such a proposition.[^12]

[93] Second, and more importantly, a review of the jurisprudence considering s. 137.1(3) suggests that the subject matter of the Whistleblower Complaints and the resultant WSJ Article – which, again, constitute the expression at issue in both the Defamation and Wolfpack Actions – do in fact relate to a matter of public interest.

[94] I begin with Pointes and Bent. There, it will be remembered, the Supreme Court held that the phrase “relates to a matter of public interest”, should be given a “liberal”, “broad”, and “generous and expansive” interpretation: Pointes, at paras. 26, 28, and 30; Bent, at para. 81. Citing its previous decision in Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640, at paras. 103, 106, the Court in Pointes stressed that “‘the public has a genuine stake in knowing about many matters’ ranging across a variety of topics” and that the key question is whether “some segment of the community would have a genuine interest in receiving information on the subject”: at para. 27.

[95] Consistent with the Supreme Court of Canada’s call for an expansive interpretation of s. 137.1(3), Ontario courts have confirmed that expressions involving commercial topics will often relate to matters of public interest. For example, in Thompson v. Cohodes, 2017 ONSC 2590 Justice Kristjanson held – and the plaintiff conceded – that expression relating to the management of a publicly traded corporation was a matter of public interest.

[96] More recently, in Fortress Real Developments Inc. v. Rabidoux, 2018 ONCA 686, 426 D.L.R. (4th) 1, Doherty J.A., speaking for a unanimous Court of Appeal for Ontario, held that a defendant’s “tweets” – which touched on a commercial topic in that they sought to alert the public to potentially risky real estate investments – related to a matter of public interest. At para. 40, Justice Doherty explained:

I read the tweets as intended to educate and caution the investing public about the risks associated with certain kinds of real estate-based investments. The identified risks include sudden downturns in the real estate market, false predictions of future investments, and “shady,” inadequately regulated operators who understate the risks associated with certain kinds of investments. In my view, alerting the investing public to risks associated with the purchase of certain products in the public marketplace is a matter of public interest.

[97] Interestingly, in March 2018 Justice Conway dealt with a situation where Catalyst was seeking an urgent interim injunction to prevent The Globe and Mail from publishing a portion of a Catalyst Confidential Update to its investors.[^13] Justice Conway dismissed Catalyst’s motion and held, amongst other things, that, even though Catalyst is a private company, its activities were a matter of public interest.

[98] In Bradford Travel and Cruises Ltd. v. Viveiros, 2019 ONSC 4587, at paras. 31-33, Justice De Sa provided the following helpful remarks:

Comments or conversations relating to corporations or businesses will more obviously have a public dimension to them. Members of the public or at least segments of the community will have an interest in knowing something about the companies that offer them services. This is true not only from the perspective of the “quality” of the services offered, but also from the perspective of whether or not a member of the public would want to contribute funds to the business/corporation.

In this respect, a company’s business practices, the conduct of its management, and even the company’s activities in the community will often have significance to the community.

Accordingly, I am satisfied that the Plaintiff has met its onus of demonstrating that the conversations address an issue of public interest.

[99] More recently, in Subway Franchise Systems of Canada, Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 25, at paras. 38-47 (“Subway No. 1”), the Court of Appeal provided some additional guidance on the criteria set out in s. 137.1(3). In Subway No. 1, one of the defendants, CBC, aired an episode of its television show “Marketplace”. The episode was in the form of an investigative report which compared the contents of chicken sandwiches sold by five Canadian fast-food chains. The sandwiches sold by Subway were reported to have a substantially lower chicken content than the other chains. Subway disputed this claim and sued the CBC, Trent University (“Trent”) (who carried out the testing of the chicken sandwiches), as well as several Trent personnel. In response, CBC and Trent brought motions under s. 137.1.

[100] Subway argued, in relation to the motion brought by Trent, that the expression at issue – described as being Trent’s communication of its test results to the CBC – did not relate to a matter of public interest. The Court of Appeal rejected this argument. The court held that “[t]he very essence of Subway’s claim is that the purpose of Trent’s testing was for it to be the basis of conclusions that would be broadcast about the chicken content of sandwiches sold by Subway and certain of its competitors” and that this was “the very matter the motion judge found to be, and that Subway does not contest is, a matter of public interest.”: at para. 46.

[101] Taking this case law into account, then, I am satisfied that the expression at issue here relates to a matter of public interest. The Threshold Burden is not intended to be particularly onerous: Pointes, at para. 28. Moreover, a number of Ontario judges have found that expressions similar to the ones at issue here relate to matters of public interest. In addition, the expression at issue here is structured similar to Subway No. 1. There, one defendant made an expression to another defendant which the latter defendant subsequently disclosed to the public by way of a television program. Similarly, in this case a set of defendants is alleged to have provided Whistleblower Complaints to another set of defendants who subsequently published a news article making reference to the expressions contained in the Whistleblower Complaints. Both the structure and subject matter of the expression at issue here are thus similar to Subway No. 1, where the moving defendants were found to have met their burden under s. 137.1(3).

[102] If that were not enough, it is also important to recognize that some of the parties involved in the litigation before me are relatively high-profile. Catalyst and West Face, in particular, are major players in Canada’s private equity market. As mentioned earlier, both companies also have a history of litigation between them, much of which has been recounted by the Canadian press. And while Catalyst and West Face are private companies, Callidus was a publicly traded company at the time of the expressions at issue.

[103] Therefore, it can hardly be said that the Catalyst Parties’ business practices, which the Whistleblower Complaints and the resultant WSJ Article ultimately revolve around, did not relate to a matter of public interest. The expression deals with private (Catalyst) and public (Callidus) corporations of significance. At the very least, certain segments of the public – for example, those who have an interest in investing and those who have already invested with the Catalyst Parties – would find this expression to be of interest. Indeed, this is so even though the Whistleblower Complaints to the OSC were only at a preliminary stage. A review of the Whistleblower Complaints reveals that they were detailed and contained a number of conclusions which were supported by research. As a result, the public would be interested in learning more about them.

[104] This then brings me to the third and final issue: the Catalyst Parties’ submission that the fact that the West Face Parties, Levitt, Baumann, and Livesey deny being involved in the expressions at issue precludes them from moving under s. 137.1 in relation to the Wolfpack Action.

[105] To support their submission, the Catalyst Parties rely on Justice Nishikawa’s decision in Walsh v. Badin, 2019 ONSC 689. In Walsh, all of the parties resided in the same condominium building. The plaintiffs commenced an action in defamation against the defendants for statements made in three anonymous letters that were distributed to the condominium’s residents.

[106] The defendants brought a motion to dismiss the action pursuant to s. 137.1. At the same time, however, the defendants denied drafting or distributing the letters and, as a result, claimed that they did not make the statements at issue in that lawsuit. They made this denial despite photographic and video evidence suggesting that they were in fact responsible for the letters. Justice Nishikawa held, amongst other things, that “[a] defendant cannot both demonstrate that the proceeding arises from an expression made by them and deny making the expression.”: at para. 27. In Justice Nishikawa’s view, a defendant who brings a motion pursuant to s. 137.1 must be prepared to admit making the impugned expression.

[107] The Moving Defendants submit that Walsh was wrongly decided. I do not propose to comment on Walsh’s correctness, as the decision is distinguishable and therefore does not assist the Catalyst Parties.

[108] Walsh was a relatively straightforward action. It involved two defendants, both of whom baldly denied having made the expression at issue despite evidence to the contrary. The Wolfpack Action, by contrast, is highly complicated. To date, numerous transcripts of conversations between the Moving Defendants have been exchanged, in addition to thousands of emails, text messages, phone records, and business documents. In total, over 30,000 documents have been produced. There are over twenty-five named defendants, as well as several “John Doe” defendants. In such circumstances, it is not surprising that some of the defendants might deny having been involved in the expressions at issue. The Catalyst Parties have cast their net wide.

[109] More to the point, unlike Walsh, there is no bald denial of the expression in this case. For instance, although the West Face Parties, Livesey, and Baumann deny making the accusations contained in the Whistleblower Complaints, they do admit to having made various other expressions. Importantly, not only do most of these other admitted expressions relate to the Catalyst Parties’ business practices – a topic which I have found relates to a matter of public interest – but the Wolfpack Action also arises from these other admitted expressions. Indeed, the Catalyst Parties rely upon many of these expressions to advance claims in civil conspiracy and joint tortfeasance. For example, Riley’s affidavit impugns the West Face Parties for, inter alia: (a) collecting and exchanging information about Catalyst and Callidus; (b) supplying information about the Catalyst Parties to the guarantors; and (c) sending and receiving emails about the Catalyst Parties. Riley’s affidavit makes similar accusations against Baumann. To use the language of Pointes, at para. 102, then, there is thus a “clear nexus” between the West Face Parties, Livesey, and Baumann’s admitted expressions and the Wolfpack Action.

[110] The same can be said for Levitt. While Levitt denies contacting the WSJ and having been an author of the WSJ Article, in his factum he admits that he made a whistleblower complaint to the OSC and that also contacted the Toronto Police. Further, Levitt notes that the underlying damages alleged by the Catalyst Parties are largely the loss of value of Callidus arising from the public disclosure of the accusations contained in the Whistleblower Complaints. Without these communications to the police, the OSC, and the WSJ, the Catalyst Parties would not have commenced the Defamation Action nor the Wolfpack Action.

[111] In the result, then, I find the Catalyst Parties’ reliance on Walsh to be misplaced. This is not a case where the defendants have baldly denied making any expression. Rather, this is a case where some defendants deny involvement in the Whistleblower Complaints and/or the publishing of the WSJ Article, but admit to making additional expressions on a matter of public interest that are causally connected to the Catalyst Parties’ proceedings.

[112] Having determined that the Moving Defendants have met their burden under s. 137.1(3), I now turn to the provisions of s. 137.1(4). This will require a separate analysis with respect to the Wolfpack Action and the Defamation Action. I begin with the Defamation Action, which is somewhat more straightforward.

PART V — THE DEFAMATION ACTION

[113] In this action the Catalyst Parties allege that the Dow Jones Defendants and McFarlane made false and defamatory statements about the Catalyst Parties in the WSJ Article attached as “Appendix A”. For ease of reference, the paragraphs in the WSJ Article have been numbered and I will refer to this numbering sequence in my Reasons going forward.

[114] The elements of defamation are well established:

(i) the impugned words must be defamatory, in the sense they would tend to lower the plaintiff’s reputation in the eyes of the reasonable person;

(ii) the words complained of refer to the plaintiff; and

(iii) the words complained of were published, meaning they were communicated to at least one person other than the plaintiff: Grant, at para. 28.

[115] In this action there is no debate about elements (ii) and (iii). It is conceded by all parties that the words complained of were published and that they refer to the Catalyst Parties. The only issue in dispute is whether the contents of the WSJ Article are defamatory.

[116] In the context of a s. 137.1(4) analysis, the Catalyst Parties must satisfy me that:

• there are grounds to believe that the Defamation Action has substantial merit (s. 137.1(4)(a)(i));

• there are grounds to believe that defendants in the Defamation Action have no valid defence in the proceeding (s. 137.1(4)(a)(ii)).

If the Catalyst Parties succeed under s. 137.1(4)(a)(i) and (ii), I must then consider whether:

• the harm likely to be or which has been suffered by the Catalyst Parties as a result of the moving parties’ expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting the expression (s. 137.1(4)(b)).

Section 137.1(4)(a)(i): Are there Grounds to Believe that the Defamation Action has Substantial Merit?

[117] The Catalyst Parties bear the burden of proof in establishing that there are “grounds to believe” that their claims for defamation have substantial merit. As noted, the Catalyst Parties must establish “something more than mere suspicion, but less than…proof on the balance of probabilities”: Pointes, at paras. 38, 40, and 41.

The Position of the Parties

The Catalyst Parties

[118] The Catalyst Parties submit that the text of the WSJ Article and the photograph of the Toronto Police Service squad car lead to the inescapable impression that the Catalyst Parties are engaged in fraudulent activities, criminal wrongdoings, and other unsavoury practices; therefore, the third element of defamation is satisfied.

[119] In support of their submission, the Catalyst Parties rely on the Court of Appeal for Ontario’s decision in Baglow v. Smith, 2012 ONCA 407, 110 O.R. (3d) 481, at para. 24. There, Blair J.A. held that:

[T]he Courts have recognized that the threshold over which a statement must pass in order to be capable of being defamatory of a plaintiff is relatively low…the question whether a statement is in fact defamatory has long been considered the purview of a trier of fact. Whether impugned words are defamatory of an individual in fact is the type of decision better made on the basis of a full factual record with cross examinations and possible expert testimony.

[120] Based on the foregoing, the Catalyst Parties submit that, for the purposes of an anti-SLAPP motion, to determine whether the words complained of are capable of being defamatory and that a determination of whether the words are in fact defamatory I must conduct a deep dive of a full factual record – something not permitted in an anti-SLAPP motion. The Catalyst Parties further submit that I must consider the following factors in determining whether the text of the WSJ Article and the photograph of the Toronto Police Service squad car are capable of being defamatory: any reasonable implications the words may bear, the context in which the words are used, the audience to whom they were published, and the manner in which they were presented: Crookes v. Newton, 2011 SCC 47, [2011] 3 S.C.R. 269, at para. 39.

[121] In addition, the Catalyst Parties argue that I must consider the WSJ Article as a whole and must not dwell or concentrate on isolated passages. In this regard, they submit that when one considers: (1) the WSJ Article headline, (2) the statement below the headline, which states, “Authorities looking into complaints that Catalyst inflated value of assets, deceived borrowers” (the “Deck”), (3) the picture of a police car, and (4) the WSJ Article itself, that, cumulatively, it takes on a defamatory meaning. They argue that the broad impression conveyed by the WSJ Article must be considered as opposed to the meaning of each individual word. According to the Catalyst Parties, the “sting” or innuendo is often not so much in the words that are used but rather in what an ordinary person would infer from them: Raymond E. Brown, Brown on Defamation, 2nd ed. (Toronto: Thomson Reuters, 2020), at ¶5.3(1)(a).

[122] The Catalyst Parties go on to submit that the allegations of unlawful conduct or criminal conduct are very serious in and of themselves and will have a significant effect on their reputation: Canadian Standards Association v. P.S. Knight Co. Ltd., 2019 ONSC 1730, at para. 44.

[123] In addition, the Catalyst Parties specifically rely on a number of statements in the WSJ Article that they claim amount to “stings” or innuendo:

(i) the Catalyst Parties engaged in fraudulent activities and wrongdoing (paras. 1 and 2 of the WSJ Article).

(ii) the Catalyst Parties engaged in financial crimes (paras. 1-3).

(iii) the Catalyst Parties violated Ontario securities laws (paras. 1-2, 8, and 31).

(iv) Catalyst deceived borrowers (paras. 2, 21-22).

(v) Catalyst overpaid Callidus $34 million for XTG/the integrity of Callidus’s accounting around XTG (paras. 24-27).

[124] In addition to the above complaints, the Catalyst Parties submit that the WSJ Article included several “false facts”:

(i) Catalyst Funds overpaid Callidus for XTG (paras. 22-26).

(ii) Catalyst artificially inflated the value of some of its assets (paras. 2, 24-26).

(iii) Catalyst deceived borrowers (para 2).

(iv) Catalyst delayed and underreported losses (para. 24).

(v) Catalyst seized XTG (paras. 9, 19-21).

(vi) The PNC bank loan was USD$23.9 million not USD$11.6 million (para. 21).

(vii) The Catalyst Parties would not comment for the article (para. 7).

[125] Based on the foregoing, the Catalyst Parties submit that there are grounds to believe that their Defamation Action has substantial merit. The Catalyst Parties submit that allegations of unlawful or criminal conduct are unequivocally conveyed to the reader. They add that there is no escaping that the WSJ Article creates the impression that the Catalyst Parties have engaged in fraudulent activities, criminal wrongdoings, and have conducted their business in a fraudulent and illegal manner. They stress that this impression is conveyed notwithstanding the fact that no charges were ever laid by the police nor OSC prosecutions commenced.

The Dow Jones Defendants

[126] The Dow Jones Defendants submit that there are no grounds to believe that the Catalyst Parties’ Defamation Action has substantial merit.

[127] The Dow Jones Defendants submit that a reasonable reader would not conclude that the Catalyst Parties were engaged in actual criminal or quasi-criminal conduct as a result of the WSJ Article. Amongst other things, they submit that the WSJ, which is a reputable publication, has truthfully reproduced allegations made in the Whistleblower Complaints and the additional comments made by McFarlane. The Dow Jones Defendants argue that public disclosure is a good thing. They add that the WSJ Article repeatedly makes it clear, beginning with its headline, that the Catalyst Parties were only facing accusations and that the OSC and the police were only conducting inquiries, which do not necessarily lead to investigations. In this regard, the Dow Jones Defendants submit that it is well-established that merely reporting that an investigation is being conducted does not lead to an inference of actual criminal or quasi-criminal wrongdoing in the minds of reasonable readers: Lewis v. Daily Telegraph, [1964] A.C. 234 (H.L.), at p. 260.

[128] The Dow Jones Defendants further submit that the overall presentation of the WSJ Article cannot ground a defamation claim. With respect to the photograph, they submit that the photo itself is not sensational but was simply added to the WSJ Article because police were making inquiries. Once again, they stress that the actual text of the WSJ Article repeatedly states that the Catalyst Parties have only been accused of wrongdoing and that there have only been inquiries at the time of publication.

[129] Overall, they argue that a reasonable reader – which, in this case, would generally consist of businesspeople – would understand that the police and the OSC reviews remained at a very preliminary stage. As such, they submit that a reasonable reader would not interpret the WSJ Article to have the extreme meanings alleged by the Catalyst Parties.

[130] In addition, the Dow Jones Defendants argue that the allegations concerning improper conduct towards investors and borrowers do not convey any imputation of wrongdoing to the Catalyst Parties beyond the fact that they have been accused of such conduct — which is true. Read fairly and in context, the Dow Jones Defendants therefore submit that the WSJ Article does not adopt or validate the allegations made by the whistleblowers, including McFarlane, but simply reports on allegations that have been made.

[131] Finally, the Dow Jones Defendants submit that I must also consider the reputation of the Catalyst Parties, without taking a deep dive, in determining whether there are grounds to believe that the WSJ Article was defamatory. They say that this consideration is especially important in this case given that (1) the Catalyst Parties have a history of aggressively pursuing unmeritorious litigation and (2) Glassman has, rather infamously, described the distressed lending market as a “blood sport”. Placed in this context, the Dow Jones Defendants submit that the WSJ Article would not have undermined the Catalyst Parties’ reputations.

McFarlane

[132] McFarlane, it will be remembered, is the former President and CEO of XTG, a borrower of Callidus. Ultimately, Catalyst transferred funds to Callidus and purchased XTG. McFarlane, who filed a whistleblower complaint alleging that Catalyst overpaid Callidus in acquiring XTG, was quoted in the WSJ Article as saying, “I have serious concerns about the integrity of Callidus’s accounting around XTG”. His whistleblower complaint was also referenced.

[133] Although McFarlane admits to having made this statement, he argues that his comments surrounding the XTG transaction are fair and true. In this regard, he relies on a letter provided to Callidus by the OSC on February 23, 2017, which raises concerns about Callidus potentially misleading investors, as well as a SEC letter to Catalyst, dated May 11, 2018, in which the SEC called for corrective action with respect to certain transactional deficiencies. The SEC specifically referenced the XTG transaction between Catalyst and Callidus and suggested that there were potential conflicts and misleading statements.

[134] Aside from the information concerning the XTG transaction and his comments in reference to it, McFarlane submits that there are no other portions of the WSJ Article concerning him that the Catalyst Parties could possibly take issue with.

Discussion

[135] I find that the Catalyst Parties have failed to establish that there are grounds to believe that their Defamation Action as against the Dow Jones Defendants has substantial merit. They have, however, satisfied me that there are grounds to believe that their Defamation Action as against McFarlane has substantial merit.

[136] Insofar as the law is concerned, I am guided by Lewis, one of the Commonwealth’s leading libel cases. In that case, the claimant, Lewis, sued the defendant, the Daily Telegraph, because it reported that the “fraud squad” was looking into his activities and the activities of his company. Lewis claimed that the Daily Telegraph article essentially called him a crook.

[137] The following passages from Lord Reid’s judgment are germane to this action and are thus worth re-producing at length:

What the ordinary man would infer without special knowledge has generally been called the natural and ordinary meaning of the words. But that expression is rather misleading in that it conceals the fact that there are two elements in it. Sometimes it is not necessary to go beyond the words themselves, as where the plaintiff has been called a thief or a murderer. But more often the sting is not so much in the words themselves as in what the ordinary man will infer from them, and that is also regarded as part of their natural and ordinary meaning. Here there would be nothing libelous in saying that an inquiry into the appellants’ affairs was proceeding: the inquiry might be by a statistician or other expert. The sting is in inferences drawn from the fact that it is the fraud squad which is making the inquiry.

In this case it is, I think, sufficient to put the test in this way. Ordinary men and women have different temperaments and outlooks. Some are unusually suspicious and some are unusually naïve. One must try to envisage people between these two extremes and see what is the most damaging meaning they would put on the words in question. So let me suppose a number of ordinary people discussing one of these paragraphs which they read in the newspaper. No doubt one of them might say – “Oh, if the fraud squad are after these people you can take it they are guilty.” But I would expect the others to turn on him, if he did say that, with such remarks as – “Be fair. This is not a police state. No doubt their affairs are in a mess or the police would not be interested. But that could be because Lewis or the cashier has been very stupid or careless. We really must not jump to conclusions. The police are fair and know their job and we shall know soon enough if there is anything in it. Wait till we see if they charge him. I wouldn’t trust him until this is cleared up, but it is another thing to condemn him unheard.”

What the ordinary man, not avid for scandal, would read into the words complained of must be a matter of impression. I can only say that I do not think he would infer guilt of fraud merely because an inquiry is on foot. And, if that is so, then it is the duty of the trial judge to direct the jury that it is for them to determine the meaning of the paragraph but that they must not hold it to impute guilt of fraud because as a matter of law the paragraph is not capable of having that meaning.

Before leaving this part of the case I must notice an argument to the effect that you can only justify a libel that the plaintiffs have so conducted their affairs as to give rise to suspicion of fraud, or as to give rise to an inquiry whether there has been fraud, by proving that they have acted fraudulently. Then it is said that if that is so there can be no difference between an allegation of suspicious conduct and an allegation of guilt. To my mind, there is a great difference between saying that a man has behaved in a suspicious manner and saying that he is guilty of an offence, and I am not convinced that you can only justify the former statement by proving guilt. I can well understand that if you say there is a rumour that X is guilty you can only justify it by proving that he is guilty, because repeating someone else’s libelous statement is just as bad as making the statement directly. But I do not think that it is necessary to reach a decision on this matter of justification in order to decide that these paragraphs can mean suspicion but cannot be held to infer guilt.: pp. 258-260.

[138] In brief, Lewis explains that there is a significant difference between the Dow Jones Defendants reporting that the OSC and police are making inquiries into fraud, on the one hand, and reporting that the Catalyst Parties have engaged in fraudulent (and related) activity, on the other. The former is not capable, as a matter of law, of lowering the reputation of the Catalyst Parties in the eyes of an ordinary person. The latter, by contrast, is. Because the Dow Jones Defendants were merely reporting that various public authorities were making inquiries into, amongst other things, fraud it therefore follows that there are no grounds to believe that the Catalyst Parties have a real prospect of success in establishing the defamation tort’s third element as against them.

[139] In light of the above, I do not propose to go through each of the aforementioned “stings” or “false facts.” Insofar as the “stings” are concerned, I rely upon my comments above and, consequently, find that the innuendo suggested by the Catalyst Parties is not made out. Reasonably interpreted, the WSJ Article is not capable of suggesting that the Catalyst Parties are criminals who engaged in fraudulent and other improper business practices. Again, this is because the WSJ Article merely reports on accusations and inquiries made by others and, more importantly, clearly states that such accusations and inquiries are just that: accusations and inquiries. To use the language of Lord Reid, a reasonable person would not “infer guilt of fraud merely because an inquiry is on foot”: Lewis, at p. 260. Or put another way, a “reasonable person” has common sense, is reasonably thoughtful, is well informed and does not have an overly fragile sensibility. He or she is not naïve or unduly suspicious or avid for scandal: [Miguna v. Toronto (City) Police Services Board, [2004] O.J. No. 2455], at paras. 3-4, aff’d [2005] O.J. No. 107 (C.A.). He or she would understand the difference between allegations and proof of guilt: Frank v. Legate, 2015 ONCA 631, 390 D.L.R. (4th) 39, at para. 40.

[140] Insofar as the “false facts” are concerned, while there may or may not be inaccuracies underlying the accusations the WSJ Article reported on, the WSJ Article merely reports on the presence of such accusations. It does not opine on their truthfulness.

[141] Furthermore, many of the alleged “false facts” are not actually false. An obvious example is the Catalyst Parties’ complaint that the WSJ Article states that they would not provide a comment for the article (false fact (vii)). In reality, the Catalyst Parties were given an opportunity to comment but declined to do so. In my view, what the Catalyst Parties really take issue with when it comes to this particular “false fact” is not its untruthfulness, but the way it was worded. The Catalyst Parties submit that because several of their officials spoke with Copeland and McNish the day before the publication, the WSJ Article should have stated that “company officials declined to provide comment for publication”. In my view, this complaint amounts to nitpicking.

[142] The other alleged “false facts” deal with the information that was provided to Copeland and McNish by way of the Whistleblower Complaints and McFarlane. Again, this information was correctly described as constituting mere allegations. In my view, then, upon reviewing the totality of the WSJ Article, an ordinary person would simply conclude that the Catalyst Parties were facing accusations by whistleblowers, including McFarlane, which had yet to be proven. Moreover, an ordinary person would likely treat such accusations with caution, particularly given that the Catalyst Parties are aggressive players in the distressed lending and private equity industries and are therefore likely to have no shortage of adversaries.

[143] In summary, then, while I understand the Catalyst Parties’ unhappiness with the WSJ Article, there is nothing in the WSJ Article that leads to the conclusion that there is a basis in law and in the record, at this stage in the proceeding, to support a finding that the Catalyst Parties’ Defamation Action as against the Dow Jones Defendants has a real prospect of success. In this regard, I also note, that the photograph of the Toronto Police Services squad car provided a certain colour but was not of a sensational nature given the fact the Toronto Police Service had begun inquiries.

[144] Insofar as McFarlane is concerned, however, I find that the Catalyst Parties have satisfied me that there are grounds to believe that their Defamation Action as against him has substantial merit. In other words, I find that there is a basis in the law and in the record, taking in account the early stage of these proceedings, to support a finding that their defamation claim against him has a real prospect of success.

[145] Unlike the Catalyst Parties’ claim against the Dow Jones Defendants, who were merely reporting on accusations made by others and clearly stated that these accusations have yet to be proven, McFarlane makes very specific accusations against the Catalyst Parties which are reproduced in the WSJ Article. Specifically, McFarlane accuses Catalyst of overpaying Callidus to acquire XTG, the company at which McFarlane previously served as President and CEO.

[146] Following the guidance espoused in Lewis, it therefore follows that there are grounds to believe that the Catalyst Parties’ claim against McFarlane have substantial merit of satisfying the test for defamation against McFarlane. Reasonably interpreted, McFarlane’s comments suggest that the Catalyst Parties were engaged in improper business practices. As Lord Reid himself noted in Lewis, directly accusing a party of fraud is clearly capable, as a matter of law, of lowering the party’s reputation in the eyes of a reasonable person.

[147] In all of the circumstances, then, there is a basis in law and the record, taking into account the stage in the proceeding, to support a finding that the Catalyst Parties’ Defamation Action as against McFarlane possesses a real prospect of success.

Section 137.1(4)(a)(ii): Are there Grounds to Believe that the Dow Jones Defendants and McFarlane have no Valid Defences in the Defamation Action?

[148] I will now consider s. 137.1(4)(a)(ii) in relation to both the Dow Jones Defendants and McFarlane. I find that the Catalyst Parties have failed to establish that the defences put into play by the Dow Jones Defendants do not tend to weigh more in the Dow Jones Defendants’ favour. As regards McFarlane, however, I find that the Catalyst Parties have discharged their burden.

Defence of Justification

[149] In Grant the Supreme Court held that once a prima facie case of defamation is made out, the words complained of are presumed to be false. A defendant can rebut that presumption by adducing evidence that the main thrust of the statement was substantially true. Partial truth is not a defence: Bent, at para. 107.

[150] The Dow Jones Defendants and McFarlane submit that all of the facts reported in the WSJ Article are true. As a result, they argue that all the factual inferences that reasonable readers would draw from the plain and ordinary meaning of the words used in the WSJ Article are also protected by the defence of justification.

[151] The Catalyst Parties, by contrast, make five submissions in respect of the defence of justification. First, they submit that while the Dow Jones Defendants have pleaded the defence of justification in their statement of defence (McFarlane has not delivered a statement of defence in the Defamation Action), they do not plead that the “stings” of the libel are true.

[152] Second, they argue that none of the alleged true facts pleaded in the Dow Jones Defendants’ statement of defence plead the truth of the meanings pleaded by the plaintiffs. On this basis alone, they submit that there are grounds to believe that there is no valid basis for the truth defence.

[153] Third, the Catalyst Parties submit that a resolution of whether the meanings of the words complained of are substantially true requires both findings of credibility and a deep dive of the record – something not permitted on an anti-SLAPP motion. Therefore, at this stage of the proceedings, they submit that there are grounds to believe that neither the Dow Jones Defendants nor McFarlane will not be able to prove the truth of the “stings” of the defamatory statements in the WSJ Article.

[154] Fourth, citing Bent, at para. 107, the Catalyst Parties argue that a defendant can only rely on the defence of justification if they are able to show that all of the meanings of the words complained of are true. In other words, the Catalyst Parties submit that the defence will fail if one of the main thrusts or “stings” of the libel are shown not to be true. According to the Catalyst Parties, this is the case here.

[155] Last, the Catalyst Parties rely on the “repetition rule” referenced in Grant. There, the Court stated, at para. 119, “that repeating a libel has the same legal consequences as originating it. This rule reflects the laws concerned that one should not be able to freely publish a scurrilous libel simply by purporting to attribute the allegation to someone else.” Thus, the Catalyst Parties submit that by repeating the Whistleblower Complaints accusing the Catalyst Parties of fraud and other misdeeds, the Dow Jones Defendants have themselves accused them of fraud.

[156] Beginning with McFarlane, I find that there are grounds to believe that his defence of justification lacks validity. While McFarlane stands by his accusations, the Catalyst Parties have adduced evidence on this motion which suggest that he wrongly described the transaction between Catalyst and Callidus. For instance, Riley has deposed that McFarlane confused the “carrying value” of XTG with the applicable “gross loan receivable” value. According to Riley, this is problematic because it is only the “gross loan receivable” value that matters. Moreover, according to Riley, the value of the gross loan receivable was CAD $101 million: the amount Catalyst ultimately paid Callidus. In any event, Riley also deposes that Catalyst was contractually obligated to make the CAD $101 million payment to Callidus according to the terms of a guarantee agreement. In light of this evidence, I am satisfied that a reasonable trier might reject this defence.

[157] Insofar as the Dow Jones Defendants are concerned, however, I find that the Catalyst Parties have failed to show that there are grounds to believe that this defence does not weigh more in favour of the Dow Jones Defendants. Unlike McFarlane, the Dow Jones Defendants truthfully reported that Whistleblower Complaints had been filed against the Catalyst Parties and that regulatory inquiries, which do not necessarily lead to prosecutions, had been commenced. In addition, I note the following.

[158] First, I do not see the relevance of the Catalyst Parties’ argument that the Dow Jones Defendants’ defence of justification must fail because none of the alleged true facts pleaded in their statement of defence plead the truth of the meanings pleaded by the plaintiffs. A plaintiff is not required to deliver a statement of defence in order to bring forth a s. 137.1 motion.

[159] Second, the main thrust of the WSJ Article is true. The WSJ Article does not purport to comment on the innocence or guilt of the Catalyst Parties; rather, it states that Whistleblower Complaints had been submitted to the OSC concerning the Catalyst Parties and that, as a result, inquiries were being made. This is the most reasonable interpretation of the WSJ Article. No deep dive is required. I agree with the Dow Jones Defendants that the Catalyst Parties are advancing the worst possible interpretation of the WSJ Article, which I must avoid: WIC Radio v. Simpson, 2008 SCC 40, [2008] 2 S.C.R. 420, at para. 56.

[160] Third, I do not think that any of the case law the Catalyst Parties cite to support their position assists them. For example, the Catalyst Parties cite Thompson, at para. 27, wherein Justice Kristjanson held that, “the sting one has committed or participated in fraud is an allegation of fact.” In my view, this case is distinguishable in that the publication with respect to the allegation of fraud was made by the defendant himself in Thompson, whereas in this case the Dow Jones Defendants were merely repeating allegations contained in the Whistleblower Complaints and by McFarlane. The Dow Jones Defendants also made it clear that the Whistleblower Complaints were only at an early stage of inquiry by the OSC and the police.

[161] Fourth, I find the Catalyst Parties’ reliance on the repetition rule cited in Grant, at para. 119 to be equally misplaced. As the Supreme Court noted in Grant, at para. 119, the repetition rule is aimed particularly at the “bald retailing of libels.” In this case, however, the WSJ Article, as I have noted on a number of occasions, qualified the allegations contained in detailed Whistleblower Complaints. In this sense, this case is distinguishable from Montour v. Beacon Publishing Inc., 2019 ONCA 246, on which the Catalyst Parties rely, where the published statements were based on statements of completely unknown reliability and which were not properly qualified.

[162] In the result, then, had I been required to consider s. 137.1(4)(a)(ii) in relation to the Dow Jones Defendants, I would have found that the Catalyst Parties have failed to show that there are grounds to believe that the Dow Jones Defendants’ reliance on the defence of justification does not tend to weigh more in favour of the Dow Jones Defendants.

Defence of Fair Comment

[163] In WIC, at paras. 1, 52, the Supreme Court of Canada outlined the elements of the fair comment defence:

(i) The comment must be on a matter of public interest;

(ii) The comment must be based on fact;

(iii) The comment, though it can include inference of fact, must be recognizable as comment;

(iv) The comment must satisfy the following objective test: could any person honestly express that opinion on the proved facts?

(v) The defence can be defeated if the plaintiff proves that the defendant was subjectively actuated by express malice, in the sense of improper motive. The defendant must prove the four elements of the defence before the onus switches back to the plaintiff to establish malice.

[164] The Catalyst Parties submit that the fair comment defence is only available if the facts on which the comment are based are sufficiently stated or otherwise known to the readers such that they are able to make up their own minds as to the editorial comment. If the factual foundation is unstated in the article, is unknown, or turns out to be false, the Catalyst Parties submit that the fair comment defence is unavailable: WIC, at para. 31. Further, the Catalyst Parties submit that the requirement to state true facts means that the Dow Jones Defendants and McFarlane cannot omit important or material facts that would falsify or alter the complexion of the facts stated in the commentary: Creative Salmon Company Ltd. v. Staniford, 2009 BCCA 61, 90 B.C.L.R. (4th) 328, at para. 61.

[165] Citing Thompson, at paras. 27-28, the Catalyst Parties also submit that the defence of fair comment cannot stand insofar as the Dow Jones Defendants are concerned because the “sting” that someone has participated in a fraud is an allegation of fact as opposed to a comment. Similarly, as regards McFarlane’s comments (at para. 27 of the WSJ Article), the Catalyst Parties argue that they are not “comments” but rather false allegations of fact.

[166] In addition, the Catalyst Parties submit that there are grounds to believe that there is not a valid defence of fair comment because there is no true factual foundation underlying any of the alleged comments: WIC, at para. 31.

[167] Finally, the Catalyst Parties argue that there is evidence that both the Dow Jones Defendants and McFarlane were actuated with malice and that, importantly, this prevents them from relying upon the defence of fair comment: WIC, at para. 52.

[168] In response, the Dow Jones Defendants and McFarlane submit that they meet the five-part definition set out in WIC. They argue that their comments were (1) in the public interest, (2) based on facts, (3) recognizable as comment, (4) honestly expressed opinions that a reasonable person could hold, and that (5) there is no evidence of malice in this case.

[169] For the reasons that follow, I find that the Catalyst Parties have discharged their onus under s. 137.1(4)(a)(ii) with respect to both McFarlane and the Dow Jones Defendants.

[170] Beginning with McFarlane, I accept that there is a basis in the record for concluding that the first four elements of the defence of fair comment are met. More specifically, I accept that there are grounds to believe that his statement that he had “serious concerns” about XTG transaction was (1) in the public interest, was (2) based on facts, is (3) recognizable as comment, and (4) was an honestly expressed opinion capable of being held by a reasonable person.

[171] However, there is evidence which suggests that there is a real prospect that McFarlane will be found to have been actuated by malice in making his statement. For example, the record reveals that McFarlane created a website specifically designed to shine light on what he perceives to be improper conduct on the part of the Catalyst Parties. It also reveals that the Catalyst Parties have also been successful in having a court-approved receiver appointed over XTG when it defaulted on its loan with Callidus, a company at which McFarlane served as President and Chief Executive Officer prior to the receivership proceedings. The record also reveals that in a separate proceeding, the Court of Appeal for Ontario recently upheld a decision of this court finding that McFarlane was liable to Callidus for a personal guarantee. In this proceeding, McFarlane unsuccessfully raised similar allegations of fraud and improper lending practices on behalf of Callidus. The evidence at this stage of the proceeding reveals that McFarlane blames the Catalyst Parties for XTG’s downfall.

[172] Taking all of this evidence of animosity between McFarlane and the Catalyst Parties into account, then, and keeping in mind the limited nature of the dive that is permissible at this stage of the proceedings, there are grounds to believe that the defence of fair comment will be defeated by malice at trial.

[173] Turning to the Dow Jones Defendants, I find that the Catalyst Parties would have also discharged their onus under s. 137.1(4)(a)(ii) in relation to the fair comment defence. As noted, to rely on the defence of fair comment, a defendant must be able to show that their expression is “recognizable as comment”. That is to say, the defendant must be able to show that their statement was more in the way of a statement of opinion, as opposed to a statement of fact: Thompson, at para. 26.

[174] While, admittedly, the distinction between statements of fact and statements of opinion is not always straightforward, in this case I am satisfied that, reasonably interpreted, the statements contained in the WSJ Article are statements of fact. Generally speaking, a fact is something that is susceptible to proof: its truth or falsity can be determined: Erika Chamberlain, Fridman’s The Law of Torts in Canada, 4th ed. (Toronto: Carswell, 2020), at p. 798. Conversely, “comments are statements of opinion that cannot be proved or disproved, such as the statement that a performance was lackluster or boring”: Chamberlain, at p. 798. In this case, the statements in the WSJ Article were (and are) susceptible to proof. For example, either public authorities were inquiring into the Catalyst Parties’ business practices, or they were not. Either four individuals had filed Whistleblower Complaints against the Catalyst Parties, or they had not. Because statements such as these are susceptible to proof, and are thus statements of fact rather than comment, it follows that the Catalyst Parties would have satisfied their burden under s. 137.1(4)(a)(ii) in relation to the Dow Jones Defendants’ ability to rely on the defence of fair comment.

[175] I reject, however, the Catalyst Parties’ argument that the Dow Jones Defendants acted with malice and that this, too, results in their defence of fair comment lacking a real prospect of success. Admittedly, there were some inappropriate text messages that flowed between Anderson and Copeland where they made unflattering comments about Glassman and the Catalyst Parties and the effect that the WSJ Article would have upon them. The Catalyst Parties make much of these electronic messages and suggest that they are not only indicative of malice, but, as will be seen in the Wolfpack Action, conspiracy.

[176] To provide some context, however, it is worthwhile noting that a review of the record discloses that Glassman’s own electronic messages with others demonstrate that his tone was often similar to, or worse, than those the Catalyst Parties complain of vis-à-vis Anderson and Copeland. In my view, this is more indicative of the sometimes unfortunate attitudes and tones used in the business milieu in which the parties operated. Therefore, the Catalyst Parties cannot suggest that the tone of the messages passing between Anderson and Copeland constitute evidence of malice unless they are prepared to concede that they too, led by Glassman, engaged in malicious activity via their own communications.

Defence of Responsible Communication

[177] Only the Dow Jones Defendants raise the defence of responsible communication. The defence of responsible communication was outlined by the Supreme Court of Canada in Grant, at para. 98:

(i) the publication must be on a matter of public interest; and

(ii) the defendant must show that the publication was responsible, in that he or she was diligent in trying to verify the allegation(s), having regard to all of the relevant circumstances.

[178] As regards the second element, Grant, at para. 126, instructs courts to consider the following factors:

(a) the seriousness of the allegation;

(b) the public importance of the matter;

(d) the status and reliability of the source;

(e) whether the plaintiff’s side of the story was sought and accurately reported;

(f) whether the inclusion of the defamatory statement was justifiable;

(g) whether the defamatory statement’s public interest lay in the fact that it was made rather than its truth (“Reportage”); and

(h) any other relevant considerations.

[179] In Grant, the Supreme Court, at para. 55, also went on to the state that, “sometimes the public interest requires that untrue statements should be granted immunity, because of the importance of robust debate on matters of public interest.”

[180] In Subway Franchise Systems of Canada, Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 26 (“Subway No. 2”), the Court of Appeal, building off the Supreme Court of Canada’s judgement in Grant, provided some additional guidance as concerns the defence of responsible communication in anti-SLAPP motions specifically. Citing Justice Cavanagh in Hamlin v. Kavanagh, 2019 ONSC 5552, at para. 45, the Court of Appeal held that “where a trier could reasonably conclude that the defendants did not conduct a sufficiently diligent investigation…a trier could reasonably conclude that the defence of responsible communication would not succeed”: at para. 57.

[181] For the reasons that follow, I find that the Catalyst Parties have failed to satisfy me that there is a basis in the law and the record, taking into account the early stage of this proceeding, to support a finding that the Dow Jones Defendants’ defence of responsible communication lacks validity.

[182] As regards the first element of the defence, I find that the WSJ Article relates to a matter of public interest. Indeed, given that I have already found the “matter of public interest” requirement to be satisfied in my analysis of the Threshold Burden, it follows that I must also find that this element of the defence is satisfied. In Pointes, at para. 27, the Supreme Court explicitly relied upon – and indeed embraced – courts’ interpretation of the phrase “matter of public interest” in the context of the defence of responsible communication to shine light on what that phrase means in the context of a s. 137.1(3) analysis.

[183] As regards the second element of the defence, whether the publication was responsible, I begin by noting that I accept that the allegations contained in the WSJ Article are of a serious nature. The WSJ Article references the fact that the Catalyst Parties are being investigated for fraud, which is “one of the most egregious securities regulatory violations”: Lehman Cohort Global Group Inc. et al., 2010 ONSEC 15, at para. 86.

[184] I also accept that the publication was of public importance. As I noted earlier, the Catalyst Parties are important players in Canada’s private equity and distressed lending markets. It is therefore important that members of the public are alerted to the fact that accusations have been made against them. The fact that these accusations were only at the inquiry stage does not alter my conclusion on this point. Notwithstanding the early stage of the OSC proceedings against the Catalyst Parties, the public still has an interest in being alerted to them.

[185] As regards the third factor, the urgency of the matter, the Catalyst Parties criticize the Dow Jones Defendants’ desire to “scoop the competition” as well as their “rush to print”. In my view, this criticism is unfounded for two reasons. First, there is always going to be pressure to print when it comes to the news reporting industry. That is simply the nature of the business. As a result, the Dow Jones Defendants cannot be criticized for acting with some sense of urgency. Second, notwithstanding this inherent pressure to publish, the record reveals that both Copeland and McNish did in fact spend some time researching the story before publishing it. Indeed, in his affidavit, Copeland notes that “[t]his story received the absolute full gauntlet of editing”. The WSJ Article was subjected to a multi-tiered vetting process, which included a “final read” by the head of the WSJ Standards and Ethics Team, before it was published. Importantly, they also gave the Catalyst Parties an opportunity to comment on the WSJ Article before it was released. The state of the record before me therefore does not support a finding that Dow Jones Defendants acted as irresponsibly as the Catalyst Parties submit.

[186] With respect to the status and reliability of the source, the Catalyst Parties argue that the Dow Jones Defendants’ sources were not of a suitable status nor did they have the requisite reliability. More specifically, they argue that the Dow Jones Defendants had reason to believe that Baumann, one of the sources for the WSJ Article and a defendant in the Wolfpack Action, was unreliable. They also argue that the two of the primary sources for the WSJ Article – McFarlane and Anderson – were biased and agenda driven.

[187] Beginning with the accusations levelled against Baumann, while there is evidence in the record suggesting that the Dow Jones Defendants may have had reason not to trust him, I do not place much weight on this. As the Catalyst Parties note in their own factum, the Dow Jones Defendants primarily relied on McFarlane and Anderson in drafting the WSJ Article (as opposed to Baumann). Indeed, aside from referencing the fact that at least four individuals filed Whistleblower Complaints, there is nothing in the WSJ Article that stems solely from Baumann. At best, then, Baumann appears to have been a minor source for the WSJ Article.

[188] As regards McFarlane and Anderson, I offer the following comments. First, as I mentioned earlier, although it is true that Anderson shorted Callidus stock, there is no evidence suggesting that the Dow Jones Defendants were aware of this fact at the time he supplied them with his whistleblower complaints. Furthermore, as mentioned earlier, it bears noting that Copeland and Anderson share a relationship dating back to at least 2014 and which, importantly, has led to the publication of several financial news stories. Ultimately, this relationship seems to have caused Copeland to place a high degree of trust in Anderson. For instance, there is evidence in the record revealing that Copeland vouched for Anderson’s reliability during the publishing process. Therefore, I am not prepared to accept, at this stage of the proceeding, that Copeland should have viewed Anderson with suspicion.

[189] Further, notwithstanding the fact that I have found that McFarlane possessed animus against the Catalyst Parties, I do not think that this means that he was an illegitimate source. The Dow Jones Defendants were not relying on McFarlane for the truth of his accusations. Rather, they were merely providing an outlet for him to express his accusations against the Catalyst Parties. Equally importantly, the Dow Jones Defendants made it explicitly clear that McFarlane’s accusations were just that: accusations. Given the purposes for which the Dow Jones Defendants were relying on McFarlane, then, I do not think that they can be faulted for retaining a source such as him.

[190] Turning to the next factor, whether the plaintiff’s side of the story was sought and accurately reported, I have already noted that the Dow Jones Defendants provided the Catalyst Parties with an opportunity to comment on the WSJ Article.

[191] The next factor, whether the WSJ Article was justifiable, is met given my comments in my analysis concerning the substantial merit test.

[192] Insofar as the “reportage” factor is concerned, I am of the view that the WSJ Article (1) specifically attributes the accusations contained within it to their authors, (2) indicates that the truth of the accusations had not been proven, (3) sets out both sides of the dispute fairly, and (4) provides the context in which the accusations were made. While the Catalyst Parties criticize the Dow Jones Defendants on the ground that they did not identify the Toronto Police Officer who made a statement contained at para. 3 of the WSJ Article, in Grant, at para. 120, the Supreme Court explicitly noted that identification is preferable but not necessary. Moreover, despite this potential shortcoming, the Dow Jones Defendants explicitly noted that inquiries by public officials do not necessarily lead to formal investigations. On balance, then, I find that the Dow Jones Defendants acted responsibly – which is the “ultimate” issue I need to consider as concerns this factor: Grant, at para. 120.

[193] Taking all of the above into consideration, then, I find that the Catalyst Parties have failed to establish that there are grounds to believe that the Dow Jones Defendants’ defence of responsible communication is not valid. Rather, I am of the view that this particular defence tends to weigh more in favour of the Dow Jones Defendants.

Defence of Qualified Privilege

[194] Both the Dow Jones Defendants and McFarlane raise the defence of qualified privilege.

[195] The defence of qualified privilege applies to the “occasion” upon which a communication is made. An occasion is privileged if the person making the communication has an interest or legal, social, or moral duty in making the communication to the person to whom it is made, and if the recipient has a corresponding interest or duty in receiving the communication: Hill v. Church of Scientology, [1995] 2 S.C.R. 1130, at para. 143. The privilege is qualified in the sense that it can be defeated upon proof of malice: Grant, at paras. 30, 34.

[196] In my view, the Catalyst Parties have satisfied their burden under s. 137.1(4)(a)(ii) in relation the Dow Jones Defendants for two reasons. First, it remains unclear whether a media outlet, such as the WSJ, can avail itself of this defence: Grant, at para. 37. Second, qualified privilege does not generally extend to publications that were extended to the world at large: Canadian Standards Association, at para. 58. Here, however, the WSJ Article was provided to an international audience of 2.4 million readers; therefore, there is a basis in fact for a finding that this defence has no real prospect of success.

[197] As concerns McFarlane, as I have already found that there are grounds to believe that the Catalyst Parties have a real prospect of establishing malice against him, it therefore follows that they have also met their burden under s. 137.1(4)(a)(ii) when it comes to his ability to rely on the defence of qualified privilege.

Defence Under the Libel and Slander Act, R.S.O. 1990, c. L.12, s .3(1)

[198] Although pleaded, the Dow Jones Defendants did not deal with this defence during oral argument. As a result, only a few brief comments are warranted.

[199] Subsection 3(1) of the Libel and Slander Act states:

3 (1) A fair and accurate report in a newspaper or in a broadcast of any of the following proceedings that are open to the public is privileged, unless it is proved that the publication thereof was made maliciously:

The proceedings of any legislative body or any part or committee thereof in the British Commonwealth that may exercise any sovereign power acquired by delegation or otherwise.
The proceedings of any administrative body that is constituted by any public authority in Canada.
The proceedings of any commission of inquiry that is constituted by any public authority in the Commonwealth.
The proceedings of any organization whose members, in whole or in part, represent any public authority in Canada.

[200] In their pleadings, the Dow Jones Defendants rely on the fact that the Whistleblower Complaints were made to the OSC, which they submit is an “administrative body” for the purposes of s. 3(1), para. 2.

[201] While I am prepared to accept that the OSC is an administrative body within the meaning of s. 3(1), para. 2, the OSC inquiries were arguably not at the “proceeding stage” as required. Nor were these inquiries open to the public, as also required under s. 3(1). In the result, I am satisfied that the Catalyst Parties have shown that this defence does not weigh more in the Dow Jones Defendants’ favour. Whether OSC inquiries can satisfy s. 3(1) is very much an open question, the answer to which does not necessarily favour the Dow Jones Defendants.

[202] In summary, with respect to the issue of valid defences pursuant to s. 137.1(4)(a)(ii), I conclude that the Catalyst Parties have failed to discharge their burden in relation to the Dow Jones Defendants. Specifically, I find that there are grounds to believe that the Dow Jones Defendants’ defences of justification and responsible communication weigh more in their favour. With respect to McFarlane, however, I find that there are grounds to believe that his alleged defences of justification, fair comment, and qualified privilege do not tend to weigh more in his favour. I now turn to s. 137.1(4)(b): The Public Interest Hurdle.

Section 137.1(4)(b): The Public Interest Hurdle

[203] Strictly speaking, because I have found that the Catalyst Parties defamation claim as against the Dow Jones Defendants lacks substantial merit and that, in any event, there are grounds to believe that the Dow Jones Defendants possess several valid defences, I do not need to consider them within my s. 137.1(4)(b) analysis. In the event that I am wrong, however, I will nevertheless consider them alongside McFarlane in my public interest analysis.

[204] As I noted at the outset of my decision, s. 137.1(4)(b) is of critical importance to an anti-SLAPP analysis. Indeed, the Supreme Court of Canada in Pointes went so far as to describe s. 137.1(4)(b) as the “crux” of the overall anti-SLAPP motion framework: at para. 61.

[205] Further, it is important to remember that at this stage of the analysis the Catalyst Parties do not need to provide definitive proof of either harm or causation: Pointes, at para. 71. Rather, they simply need to provide evidence for the motion judge to draw an inference of the likelihood of harm and the relevant causal link.

[206] In addition, the motion judge’s task under s. 137.1(4)(b) is not to balance the abstract public interests against one another. Instead, the motion judge must carefully consider which interest is more deserving of protection in the light of the unique context of the particular proceeding: Pointes, at paras. 65-67.

[207] In undertaking this analysis, based on the guidance provided by the Supreme Court in Bent, at paras. 142-174, I must undertake three successive steps:

• first, I must consider whether the Catalyst Parties have suffered, or will suffer, harm caused by the impugned expressions;

• second, if harm has been established, I must assess the public interest in protecting the expression; and

• third, I must weigh the public interest.

[208] I will deal with each of these issues in turn.

The Harm Analysis

[209] Subject to my comments below, I am satisfied that the Catalyst Parties have suffered harm as a result of the impugned expression.

[210] As noted earlier, the Catalyst Parties have submitted two expert reports which outline the harm they say they suffered due to the publication of the WSJ Article. The first report, the Juneja Report, values the total harm to Callidus at approximately CAD $144-161 million. The Juneja Report purports to take other factors into account before concluding that the losses sustained by Callidus were solely as a result of the WSJ Article. The second report, the Sunshine Report, opines that lenders accused of the types of activities that Callidus was accused of in the WSJ Article diminishes their chances of competing for new loans and that this, in turn, would have resulted in harm for Callidus.

[211] Although neither the Dow Jones Defendants nor McFarlane have delivered any expert reports of their own on the motions before me, they point to additional facts which they say show that any harm the Catalyst Parties suffered does not stem from the WSJ Article. In particular, they point to the fact that on August 11, 2017 (2 days after the WSJ Article was published) Callidus held its Q2 2017 earnings call. In this earnings call, Callidus noted that its earnings were below expectations and that this was likely to cause its share value to decline. In this regard they point out the fact that while Callidus’s share price dropped approximately 21% after the publication of the WSJ Article, the price did rally after the Catalyst Parties released a press release and the Print Article was released which included the Catalyst Parties’ rebuttal to the WSJ Article. Overall, they submit, the stock ultimately rallied so that they net decline was approximately 8% and it was not until Callidus held its Q2 2017 earnings call that there was a further decline. They also point to the Dalton Report, which highlighted many problems with Callidus’ business model. Indeed, the Dalton Report described Callidus as being a company in crisis and noted several significant problems with Callidus’ viability, none of which involved the WSJ Article nor any associated allegations of conspiracy or defamation. The Dalton Report also noted that Callidus’ operating and financial performance began to “decline significantly” beginning in September 2016 and that Callidus’ new deal origination “virtually halted” in 2016 - all of which was well before the WSJ Article was published. Finally, the Dow Jones Defendants and McFarlane rely on the aforementioned Sutin Affidavit. Although the materials filed with the Sutin Affidavit reference the fact that Callidus was experiencing problems due to the WSJ Article, the Affidavit primarily criticizes Callidus’ own business-related missteps for its problems.

[212] While these submissions have some merit, they do not lead to the conclusion that the Catalyst Parties did not suffer any harm as a result of the WSJ Article. Rather, they suggest, without undertaking a deep dive, that the harm that the Catalyst Parties allegedly suffered from the WSJ Article is less, perhaps significantly so, than the Juneja and Sunshine Reports opine. While this has a bearing on the “weighing exercise” under s. 137.1(4)(b), discussed below, all that is important at this stage of the analysis is that there is evidence in the record which suggests that the Catalyst Parties have suffered harm and that this harm, at least in part, stems from the publication of the WSJ Article: Pointes, at para. 68.

[213] In addition, the Catalyst Parties are suing them for defamation - a tort in which general damages are presumed: Pointes, at para. 71. And while this presumption may be attenuated in the case of corporate plaintiffs (see Barrick Gold Corp. v. Lopehandia, 2004 12938 (ON CA), 71 O.R. (3d) 416 (C.A.), at para. 49), this does not mean that I should presume that the Catalyst Parties are not entitled to any general damages as a result of the WSJ Article. Indeed, the Supreme Court of Canada did not engage with this argument in its harm analysis in Pointes even though that case also involved a corporate plaintiff.

[214] In the result, then, while I have reservations about the quantum of harm the Catalyst Parties say they have suffered, discussed below, I am satisfied that they have suffered some harm as a result of the WSJ Article. The Dow Jones Defendants also take issue as to whether Catalyst sustained any damages since, they submit, in law, Catalyst did not own the shares of Callidus, the Catalyst Funds did and as such Catalyst suffered no direct loss. I do not plan to do a deep dive into this legal submission since it was not supported by any case law. I believe that harm has been made out. Overall, given what I have noted above, the harm suffered lies in the mid range of the spectrum.

The Public Interest in Protecting the Impugned Expression

[215] As noted, the expressions in question consist of the Whistleblower Complaints and the resulting WSJ Article.

[216] The Catalyst Parties submit that there is no public interest in protecting these expressions. They say that the WSJ Article was a repetition of unproven fraud and other accusations contained in the Whistleblower Complaints that were only at the intake/inquiries stage at the OSC. In this regard, they note that the OSC never took any enforcement action (although, as noted, corrective action was mandated). They further stress that Copeland knew that the allegations were unproven and nonetheless published them at a time when they Catalyst Parties were alleging that there was a conspiracy against them. This being the case, the Catalyst Parties submit that the WSJ Article was a one-sided piece tantamount to a smear campaign on the Catalyst Parties’ reputation. This, in turn, caused them to suffer damage.

[217] I prefer the submissions of the Dow Jones Defendants and McFarlane, however, to the effect that the expressions contained in the WSJ Article are valid and important topics of public debate concerning major financial entities that solicit investments from both domestic and international actors. I further accept that in determining whether the public has an interest in protecting the expressions in question I should have regard to s. 2(b) of the Charter and that, in this case, the WSJ Article and McFarlane’s Whistleblower Complaints aid in “the search for truth” – one of the core values underlying s. 2(b) – by drawing attention to the business practices of a major financial entity: R. v. Sharpe, 2001 SCC 2, [2001] 1 SCR 45, at paras. 23, 181-182; Bent, at para. 163.

[218] Specifically, insofar as the Whistleblower Complaints are concerned, although the Catalyst Parties submit that they were inappropriately submitted to the OSC, the fact is that the OSC, and the SEC for that matter, both mandated the Catalyst Parties to undertake corrective measures. The actions taken by the OSC and SEC are supportive of the notion that the Whistleblower Complaints raised at least some legitimate concerns.

[219] I also offer the following additional remarks. First, while the Catalyst Parties attempt to vilify the WSJ Article as an irresponsible and reckless publication, I have already found that it is the Catalyst Parties who are attempting to put the worst possible spin on this particular piece of expression. A proper review of the WSJ Article suggests that it was responsibly published and is thus worthy of protection.

[220] Second, in determining the value of the impugned expression, it bears noting that the WSJ Article was not itself accusing the Catalyst Parties of fraud. Rather, it was merely reporting the accusations contained in the Whistleblower Complaints and providing an accurate recitation of the stage of both the OSC and Toronto Police Service inquiries. In addition, the whistleblower complaints filed by Anderson, which formed the primary basis of the WSJ Article, were lengthy, detailed, and made reference to 73 documents in support of its accusations. In other words, this is suggestive of a relatively well-researched document.

[221] Further, in determining the public interest in protecting the expressions in question, Bent, at para. 164 instructs me to consider whether the Catalyst Parties were given an opportunity to respond. In this case, Copeland and McNish had a number of conversations with the Catalyst Parties and made a number of requests for information, position, or comment upon which they could report. Ultimately a meeting was held on August 8, 2017, the day before the WSJ Article was published. The meeting was recorded by both sides and transcripts were prepared. Notwithstanding this and the fact that Copeland and McNish had put several questions to the Catalyst Parties prior to the meeting, the Catalyst Parties refused to go on the record and declined to provide any comment concerning the Whistleblower Complaints which included McFarlane’s complaints concerning XTG. Therefore, the Supreme Court’s criticism of the defendant in Bent does not resonate in this case.

[222] I also note that if a defendant’s failure to reach out to a plaintiff before making the expression in question can render it less worthy of protection (as was the case in Bent), it seems to me that defendants, such as the Dow Jones Defendants, who do actually provide plaintiffs with the opportunity to comment on a story before publication, ought to have their expression afforded more protection.

[223] It is also important to note that the Print Article was published shortly after the WSJ Article went online. Notwithstanding the Catalyst Parties’ refusal to provide comment for the WSJ Article, the Print Article contained statements from the Catalyst Parties in which they defended their position. The Catalyst Parties specifically took issue with the Whistleblower Complaints. They described them as being “deliberately misleading” and their defence was included in the Print Article. This demonstrates that the Dow Jones Defendants were prepared to publish comments released by the Catalyst Parties that were supportive of the Catalyst Parties made between the time of the release of the WSJ Article and the Print Article even though the Catalyst Parties had declined an opportunity to comment in the WSJ Article. It speaks of a certain fairness.

[224] Finally, I note that Pointes also calls for consideration of the “chilling effect on future expression” and the “broader or collateral effects of other expression on matters of public interest”: at para. 80 [emphasis omitted]. If I were to find that the expressions at issue here – that is, the Whistleblower Complaints and the WSJ Article – fell at the lower end of the protection-deserving spectrum, then other whistleblowers and media outlets might be less inclined to either file whistleblower complaints or publish news stories on matters of public interest.

[225] Based on the foregoing, I am therefore of the view that the WSJ Article falls at the higher end of the protection-deserving spectrum. I am also of the view that the Whistleblower Complaints, including McFarlane’s, fall in the mid to high-end of this spectrum.

The Weighing of the Public Interest

[226] At this stage of the analysis I am required to weigh the harm suffered by the Catalyst Parties, on the one hand, with the public interest in protecting the Dow Jones Defendants’ and McFarlane’s expression, on the other.

[227] In my view, this exercise favours the Dow Jones Defendants and McFarlane. In other words, the Catalyst Parties have failed to establish on a balance of probabilities that the harm likely to be or which has been suffered as a result of the impugned expression is sufficiently serious that the public interest in permitting their Defamation Action to continue outweighs the public interest in protecting the impugned expression: Bent, at para. 174.

[228] While I accept that the Catalyst Parties suffered some harm as a result of the WSJ Article, the article was nonetheless published responsibly and, as mentioned, is therefore worthy of protection. Indeed, rather than recklessly accusing the Catalyst Parties of fraud, the WSJ Article simply repeated the accusations contained in the Whistleblower Complaints and the additional comments provided by McFarlane, in which he noted that he had serious concerns about the integrity of Callidus’s accounting concerning XTG. It also went on to note that McFarlane had been held liable for his personal guarantee to Callidus concerning XTG. Once again, the Catalyst Parties were also given an opportunity to comment on the accusations contained in the WSJ Article, which explicitly noted that the accusations had yet to be proven. Later, the Catalyst Parties’ rebuttals were reported in the Print Article.

[229] On the whole, then, I do not believe that the content of the WSJ Article and the Whistleblower Complaints are so unreasonable that the weighing of the Public Interest Hurdle is in the Catalyst Parties’ favour. As noted, I am of the view that these expressions are deserving of protection and that they deserve an elevated level of protection as they serve a public interest in publishing issues concerning the vitality and transparency of significant, publicly-traded corporations, as well as Canada’s capital markets.

[230] I also pause here to note that the weighing exercise that I will undertake with respect to the Wolfpack Action resonates in the Defamation Action as well. I therefore adopt and rely upon my analysis in the Wolfpack Action – specifically my comments concerning the history of the litigation between the parties; Project Maple Tree; the financial and power imbalance with respect to McFarlane; and issues regarding access to justice. In my view, it is reasonable to incorporate those findings into this analysis given the fact that both actions arise out of the same expressions, Copeland and McFarlane are defendants in both actions, and given the overall factual matrix of the two actions; there is considerable overlap that must be considered.

[231] Ultimately, as the Supreme Court of Canada noted in Pointes, at para. 81, “the open-ended nature of s. 137.1(4)(b) provides courts with the ability to scrutinize what is really going on in the particular case before them”. As I set out in a more expansive fashion in the Wolfpack Action, what is really going on in both the Defamation and Wolfpack Actions is troubling. Essentially, the Catalyst Parties appear to have a lengthy history of suing (repeatedly and unsuccessfully in the case of West Face) and pursuing those who offend them. As noted, they have even gone so far as to launch the ethically dubious “Project Maple Tree”, which saw “sting” operations executed on a former judge of the Superior Court of Justice.

[232] What is equally concerning, and as was noted by Justice Boswell, is that Project Maple Tree was commenced in circumstances where there was absolutely no basis to suggest that Justice Newbould was biased against the Catalyst Parties in the Moyse Action. Further, it is troubling that Project Maple Tree proceeded even though the Catalyst Parties knew that the information received in the “Vincent Hannah” email – which served as a major impetus for this extra-judicial endeavour – was not credible. Further, notwithstanding the Catalyst Parties’ contention that Project Maple Tree arose out of a fear that the Catalyst Parties were being attacked, Project Maple Tree does not consist, generally, of any investigation to determine whether this was the case. Instead, it constituted a vindictive attack on others based largely on Glassman’s inability to accept defeat in the Moyse Action.

[233] I have thus concluded that what is really going on in the Defamation Action is that the Catalyst Parties have strategically tried to silence the Dow Jones Defendants and McFarlane. Their strategy has included attacking others via Project Maple Tree which would also undermine the Dow Jones Defendants and McFarlane. In other words, drawing upon the guidance in Bent, at para. 172, this is a case where the Catalyst Parties are attempting to silence their critics rather than address legitimate wrongs against them. It is therefore the type of case that comes within the legislature’s contemplation of one deserving to be summarily dismissed at an early stage and comes within the language of the statute requiring such a dismissal.

[234] In the result, then, even if the Catalyst Parties have suffered some harm as a result of the conduct of McFarlane and the Dow Jones Defendants, and even if I had found that the Defamation Action was technically meritorious as against both McFarlane and the Dow Jones Defendants (as opposed to just McFarlane), I am of the view that the public interest in protecting the expressions at issue here outweigh the public interest in allowing the Defamation Action to proceed. To find otherwise would result in the silencing of responsible reporting on significant issues involving plaintiffs, in this case the Catalyst Parties, who have demonstrated a willingness and ability to repeatedly attack their adversaries both inside and outside of the courtroom and who have reverted to ethically dubious activities which make the circumstances of this case truly extraordinary.

PART VI — THE WOLFPACK ACTION

[235] In the Wolfpack Action the Catalyst Parties allege that the Wolfpack Defendants conspired to cause them economic harm by short-selling Callidus stock and spreading misinformation about them. They submit that this conspiracy culminated in the Whistleblower Complaints made by Anderson, McFarlane, and Levitt and the leaking of those complaints to the WSJ for publication.

[236] The allegations in the Wolfpack Action are numerous and complicated by the fact that the Catalyst Parties do not assert every cause of action against every moving party.

[237] More particularly the Catalyst Parties appear to plead the following causes of action as against the Wolfpack Defendants:

• Defamation

• Injurious Falsehood

• Predominant purpose conspiracy

• Unlawful means conspiracy

• Causing loss by unlawful means

[238] Unlike my Defamation Action analysis, given the multiple causes of action at issue in the Wolfpack Action, I propose to deal with both prongs of s. 137.1(4)(a) concurrently when reviewing each cause of action. In other words, in relation to each respective cause of action, I will:

• outline its elements;

• outline the parties’ respective arguments;

• consider whether there are grounds to believe that it possesses substantial merit; and

• consider whether there are grounds to believe that the Wolfpack Defendants possess any valid defences to it.

(A) Defamation

[239] As I noted in relation to the Defamation Action, the elements of defamation are well established. For convenience, I reproduce them here:

(i) the impugned words must be defamatory, in the sense they would tend to lower the plaintiff’s reputation in the eyes of the reasonable person;

(ii) the words complained of refer to the plaintiff; and

(iii) the words complained of were published, meaning they were communicated to at least one person other than the plaintiff: Grant, at para. 28

The Position of the Parties

The Catalyst Parties

[240] The Catalyst Parties’ cause of action in defamation is somewhat difficult to follow. Nonetheless, it appears to arise out of two discrete sets of statements:

• The accusations contained in the WSJ Article

• Baumann, Levitt, and Anderson’s (among other defendants who are not relevant to the proceeding) statements to Copeland

(a) The First Set of Alleged Defamatory Statements

[241] The first alleged defamatory statement consists of the accusations contained in the WSJ Article. As in the Defamation Action, the Catalyst Parties submit that allegations contained in the WSJ Article are false and defamatory and that all those involved in their publication are therefore liable for defamation.

[242] Despite this similarity to the Defamation Action, the number of defendants who are allegedly liable for the statements contained in the WSJ Article is significantly expanded in the Wolfpack Action. More specifically, in the Wolfpack Action the Catalyst Parties sue Copeland and McFarlane, once again, as well as several other defendants, including Anderson, Baumann, West Face, Boland, Levitt, and Livesey. As noted, collectively I refer to these parties as the Wolfpack Defendants.

[243] The Catalyst Parties argue that Anderson, Baumann, the West Face Parties, Levitt, and Livesey, “cooperated, lent aid, supported and encouraged” the making of the allegedly false accusations contained in the WSJ Article and are therefore liable as joint tortfeasors. By contrast, rather than alleging that McFarlane and Copeland are liable as joint tortfeasors, both of these parties are said to be directly liable for either making a defamatory statement (McFarlane) or publishing a defamatory article (Copeland).

[244] In other words, then, McFarlane and Copeland are said to be directly liable for this defamation allegation. By contrast, the remaining Wolfpack Defendants are said to be liable for assisting Copeland and McFarlane in their defamatory endeavours. This means that the liability of the remaining Wolfpack Defendants ultimately hinges on Copeland and McFarlane’s liability. That is, I must find that either Copeland or McFarlane committed a tort – defamation in this instance – such that the remaining Wolfpack Defendants can be held liable as joint tortfeasors for assisting in bringing about that tort.

(b) The Second Set of Alleged Defamatory Statements

[245] The second set of allegedly defamatory statements consists of communications made by McFarlane, Baumann, Levitt, and Anderson to Copeland. Insofar as McFarlane is concerned, the Catalyst Parties’ claim that he made false and defamatory statements to Copeland concerning alleged nefarious accounting practices concerning the loan that Callidus extended to XTG.

[246] Turning to the remaining defendants, Baumann, Levitt, and Anderson, the Catalyst Parties submit that they made the following false and defamatory statements to Copeland:

• Catalyst and Callidus are under active investigation by the Toronto police department and various regulators, including the OSC and the Alberta Securities Commission, regarding accounting irregularities, securities fraud, and other criminal misconduct.

• Callidus and Catalyst failed to decrease the valuations of their loan collateral when companies in the Callidus portfolio ceased making interest payments or only made partial payments.

• Callidus and Catalyst engaged in fraud by misleading borrowers about deal terms in order to withhold funds from borrowers at critical times and to allow the debt to balloon in order to assume control and ultimately ownership of borrowers.

• Catalyst misled its investors about the valuation of assets held in Catalyst’s investment portfolios to collect fees and other payments to which it was not entitled and that Callidus had misled its borrowers about loans extended to them by Callidus.

• Callidus and Catalyst falsely certified that their financial statements were prepared in accordance with IRFS and, in particular, that they failed to conduct an appropriate impairment analysis on the assets of the Callidus borrowers and Catalyst funds despite disclosures in their financial statements that such analysis had been done.

The Wolfpack Defendants

[247] The Wolfpack Defendants assert that the Catalyst Parties’ allegations concerning both sets of defamatory statements lack substantial merit. In any event, the Wolfpack Defendants submit that they are able to advance several valid defences: namely, the defence of justification, the defence of responsible communication, the defence of fair comment, the defence of qualified privilege, and the defence of absolute privilege.

[248] In addition to these general submissions, some of the Wolfpack Defendants specifically expand on why the defamation allegations lack substantial merit as against them. For example, as regards the first alleged defamatory act – that is, the publication of the WSJ Article – Anderson submits that he was no more than a source for the article. He stresses that he had no role in preparing or publishing the WSJ Article and was unable to influence control over or input into the article’s content. According to Anderson, liability cannot attach to someone who merely contributes information to an article but has no involvement in the publication process or approval of the final product.

[249] As regards the second alleged defamatory act – that is, the making of defamatory statements to Copeland – Anderson concedes that he did in fact supply Copeland with a copy of his whistleblower complaints. However, he submits that this would not have lowered the reputation of the Catalyst Parties’ reputation in the eyes of a reasonable person receiving the communication. More specifically, Anderson argues that, as a veteran journalist, Copeland would not have had his views of the reputation of the Catalyst Parties’ lowered by virtue of receiving this information. Rather, he says that Copeland would have reviewed and critically assessed the information as a whole, before coming to his own independent conclusion.

[250] Similarly, the West Face Parties submit that they did not publish any of the alleged defamatory words contained in the WSJ Article and that they did not cause anyone else to do so. According to the West Face Parties, while the Catalyst Parties continue to make bald accusations to the effect that the West Face Parties worked with others to publish the defamatory WSJ Article, the evidence reveals that they had “no role whatsoever in their publication.”

Discussion

[251] For the sake of clarity, I will provide a separate analysis for each of the two discrete sets of allegedly defamatory statements.

(a) The First Set of Alleged Defamatory Statements

[252] As noted in the Defamation Action, when it comes to the publication of the WSJ Article, it is indisputable that the final two elements of defamation are made out on the facts of this case. The words complained of clearly refer to the Catalyst Parties and were clearly published. Like the Defamation Action, then, the only question is whether the contents of the WSJ Article are defamatory.

[253] In my view, employing the test set out in Pointes, there are grounds to believe that the Catalyst Parties’ first defamation allegation has a real prospect of success against all the Wolfpack Defendants except Copeland. As I noted in the Defamation Action, McFarlane makes very specific accusations against the Catalyst Parties, which, in turn, are reproduced in the WSJ Article. While McFarlane stands by his accusations, I have already concluded that they would tend to lower the Catalyst Parties’ reputation in the eyes of a reasonable person (see paras. 144-146). Given that McFarlane’s comments are also at issue in the context of the Wolfpack Action, it therefore follows that the Catalyst Parties have a real prospect of succeeding on this element here.

[254] Moreover, I find that there are also grounds to believe that Anderson, Baumann, the West Face Parties, Levitt, and Livesey “co-operated, lent aid, supported, or encouraged” McFarlane to make the impugned statements and that, therefore, there is a real prospect that they will be found to be liable as joint tortfeasors at trial: Rutman v. Rabinowitz, 2018 ONCA 80, 420 D.L.R. (4th) 310, at para. 34. Specifically, although I will not comment on all of the evidence, I find the following evidence as against each defendant to be pertinent.

[255] Anderson:

(i) There are text messages in the record suggesting that Anderson contacted Copeland on July 13, 2017. In the weeks that followed these text messages, it is notable that McFarlane (in addition to others) began to provide Copeland with information about the Catalyst Parties. It is also notable that there are phone transcripts suggesting that conference calls between McFarlane, Anderson, and McNish were held in the weeks following these text messages.

(ii) In response to an email from McFarlane providing Anderson with the contact details of several journalists, Anderson informs McFarlane that “[he]’ll connect with all of them when the timing makes sense”.

(iii) There is evidence in the form of an email, dated November 27, 2019, that a call was arranged between Anderson, Levitt, and McFarlane.

[256] Levitt:

(i) Emails from May 2016 suggest that Levitt and Baumann (among others who are not relevant to this proceeding) banded together with McFarlane and agreed to a “joint decision-making process”.

(ii) On May 19, 2017, shortly before the Whistleblower Complaints were filed and the WSJ Articles were published, Levitt, McFarlane, and Baumann (among others who are not relevant to this proceeding) contacted the Toronto Police and made a criminal complaint against the Catalyst Parties.

(iii) As mentioned above, there is evidence in the form of an email, dated November 27, 2019, that a call was arranged between Anderson, Levitt, and McFarlane.

[257] Baumann:

(i) As mentioned above, emails from May 2016 suggest that Baumann was part of a “joint decision-making process” with McFarlane.

(ii) As mentioned above, Baumann worked with McFarlane (among others) to contact the Toronto Police so that a criminal complaint against the Catalyst Parties could be lodged.

(iii) Emails suggest that Baumann was in contact with many of the same media outlets that McFarlane was contacting – for example, Reuters and the WSJ.

[258] The West Face Parties:

(i) There are many phone calls which suggest that Anderson and Boland were communicating with one another through Langstaff. Indeed, recently produced records of Boland’s outgoing cell phone calls reveal 170 phone calls between Boland and Langstaff from November 2016 and August 2017. Many of these phone calls between Boland and Langstaff took place shortly before/after phone calls between Langstaff and Anderson. It does bear noting, however, that many of these phone calls were brief in nature and could be missed calls. Also, Boland and Langstaff were friends and had other business dealings. Given the guidance in Pointes, however, I am not to do a deep dive into the nature of these phone calls but rather it is reasonable to note that the calls took place.

(ii) There is evidence of a phone call between Boland and Anderson.

(iii) There is an email contained in the record in which McFarlane suggests that “it might be helpful to connect [Anderson] with West Face”.

(iv) Phone records reveal that Boland was in contact with Levitt, one of the guarantors involved in a “joint decision-making process” with McFarlane.

[259] Livesey:

(i) Riley’s affidavit contains evidence which suggests that Levitt thought that it would be beneficial to put Livesey in contact with Anderson. As noted, the evidence reveals that both Anderson and Levitt were engaged in communications with McFarlane.

(ii) There is evidence of phone calls between Boland and Livesey. As noted, Boland was in communication with parties who were communicating with McFarlane directly.

[260] In light of all of this evidence of communications between the alleged joint tortfeasors and McFarlane, as well as taking into account the early, pre-discovery stage of this proceeding, I am of the view that there are grounds to believe that the Catalyst Parties joint tortfeasor allegation has a real prospect of success.

[261] As regards Copeland, however, I find that there are not grounds to believe that the Catalyst Parties’ first defamation allegation has a real prospect of success. As mentioned, rather than arguing that Copeland is liable as a joint tortfeasor, at p. 109 of their Wolfpack Action factum, the Catalyst Parties state that they are relying on the submissions contained in their Defamation Action factum to argue that Copeland is directly liable for this particular defamation allegation. However, in the Defamation Action, I have already found that the Catalyst Parties’ claim against the Dow Jones Defendants lacks substantial merit. Thus, for my reasons in relation to the Defamation Action I find that, as against Copeland, the Catalyst Parties’ defamation claim lacks a real prospect of success.

[262] Having found that the Catalyst Parties succeed under s. 137.1(4)(a)(i) (save as against Copeland), I must now consider whether they succeed under s. 137.1(4)(a)(ii). As noted, the Wolfpack Defendants advance the following defences in relation the defamation allegations against them: the defence of justification, the defence of responsible communication, the defence of fair comment, the defence of qualified privilege, and the defence of absolute privilege.

Defence of Justification

[263] The test for the defence of justification is set out in para. 149 in my analysis of the Defamation Action. As I have found that McFarlane cannot rely on the defence of justification in relation to the Defamation Action, it follows that he cannot rely on it here either. This is because the Catalyst Parties’ defamation allegation in the Wolfpack Action is based on the same statements as were at issue in the Defamation Action (i.e., McFarlane’s accusations against the Catalyst Parties which were reproduced in the WSJ Article). Having already found that the defence lacks validity in the Defamation Action, it follows that it also lacks validity here.

[264] To the extent that Anderson, Baumann, the West Face Parties, Levitt, and Livesey are said to be liable as joint tortfeasors, it also follows that they cannot advance the defence of justification. This is because, rather than having made the statements themselves, these other defendants are merely alleged to have been part of a common plan to see that McFarlane’s comments were published. Thus, if the person who actually made the statements cannot rely on the defence of justification, it follows that all those who acted pursuant to a common design with the statement utterer cannot rely on it either.

[265] As regards Copeland, although I have already found that this particular defamation allegation lacks substantial merit as against him, had I been required to consider the defence of justification in relation to him, I would have found that there are grounds to believe that it weighs more in his favour. Again, this is because in the Defamation Action, I have already found that there are grounds to believe that he can rely on it. Having made this finding in the Defamation Action, it follows that it also applies in the context of the Wolfpack Action.

Defence of Fair Comment

[266] The test for the defence of fair comment is set out in para. 163 in my analysis of the Defamation Action.

[267] In the Defamation Action, I found that McFarlane could not rely on the defence of fair comment. Given that McFarlane’s statements are also at issue in the Wolfpack Action, it follows that he cannot rely on it here either. Because McFarlane cannot rely on the defence of fair comment, it also follows that none of the defendants who are allegedly liable as joint tortfeasors can rely on it either.

[268] As concerns Copeland, in the Defamation Action I also found that he could not rely on the defence of fair comment. Again, because the WSJ Article allegedly grounds Copeland’s liability in both the Defamation and Wolfpack Actions, it follows that he cannot rely on the defence of fair comment here.

Defence of Responsible Communication

[269] The test for the defence of responsible communication is set out in paras. 177-178 in my analysis of the Defamation Action.

[270] In the Defamation Action, I found that the defence of responsible communication weighed in favour of the Dow Jones Defendants. As regards Copeland, then, I find there are grounds to believe that it weighs more in his favour.

[271] Importantly, however, this does not end the matter. In the Defamation Action, I did not need to consider whether McFarlane may avail himself of the defence of responsible communication as he did not raise the defence. In my view, the Catalyst Parties have succeeded in showing that there are grounds to believe that McFarlane (and thus all of the other defendants who are said to be liable as joint tortfeasors) cannot rely on the defence of responsible communication.

[272] While I accept that the WSJ Article concerned a matter of public interest, I find that McFarlane cannot rely on it because, in the Defamation Action, I already found that there is a real prospect that the Catalyst Parties will be able to demonstrate that he was actuated with malice. In Grant, at para. 125, the Supreme Court was explicit: “A defendant who has acted with malice in publishing defamatory allegations has by definition not acted responsibly.” Therefore, as there are grounds to believe that the Catalyst Parties will be able to show that McFarlane was actuated with malice, it follows that he cannot rely on the defence of responsible communication. This also means that the Wolfpack Defendants who are said to be liable as joint tortfeasors in regard to McFarlane’s statements cannot rely on the defence of responsible communication either.

Defence of Qualified Privilege

[273] The test for the defence of qualified privilege is set out in para. 195 in my analysis of the Defamation Action.

[274] In the Defamation Action, I found that the Catalyst Parties were able to show that the defence of qualified privilege lacked validity in relation to both the Dow Jones Defendants and McFarlane. Having made this finding there, it follows that none of the Wolfpack Defendants, including Copeland, can rely on the defence of qualified privilege here either (i.e., there are grounds to believe that it lacks a real prospect of success). Again, this is because the Wolfpack Action is largely just an expanded version of the Defamation Action when it comes to this alleged defamatory act.

Defence of Absolute Privilege

[275] In their joint memorandum of law, the Wolfpack Defendants submit that the Catalyst Parties have failed to show that there are grounds to believe that their alleged defence of absolute privilege is invalid. However, they do not explain how this defence could apply to this alleged defamation act. Indeed, given that the defence applies only to communications which take place during, incidental to, or in the furtherance of judicial or quasi-judicial proceedings, it is hard to see how it could apply to this specific defamation allegation. As a result, I find that the Catalyst Parties have succeeded here – that is, the defence of absolute privilege lacks a real prospect of success.

Conclusion

[276] In conclusion, then, when it comes to this particular defamation allegation, I find that the Catalyst Parties have discharged their onus under s. 137.1(4)(a)(ii) in regard to McFarlane and all those defendants that are said to be liable as joint tortfeasors. As regards Copeland, however, I find that the Catalyst Parties have failed to show that there are grounds to believe that he is unable to rely on several defences, namely, the defence of justification and the defence of responsible communication.

(b) The Second Set of Alleged Defamatory Statements

[277] I now turn to the second set of alleged defamatory statements – that is, the alleged false and defamatory communications made by McFarlane, Baumann, Levitt, and Anderson to Copeland.

[278] In my view, the Catalyst Parties have succeeded in showing that there are grounds to believe that this particular defamation claim has substantial merit. As in relation to the first alleged defamatory statements – i.e., the accusations contained in the WSJ Articles – there is no real dispute that the final two elements of defamation are met: McFarlane, Levitt, Baumann, and Anderson’s statements (1) referred to the Catalyst Parties and (2) were communicated to at least one other person, namely, Copeland.

[279] The question then becomes: were these statements defamatory in that they would tend to lower the Catalyst Parties’ reputation in the eyes of a reasonable person?

[280] For convenience, I reproduce the alleged defamatory statements here, beginning with the statement made by McFarlane:

• McFarlane detailed to Copeland that Callidus and Catalyst engaged in allegedly nefarious accounting practices concerning a loan that Callidus extended to XTG

[281] As for the remaining defendants, Baumann, Levitt, and Anderson, the Catalyst Parties submit that they made the following false and defamatory statements to Copeland:

• Callidus and Catalyst failed to decrease the valuations of their loan collateral when companies in the Callidus portfolio ceased making interest payments or only made partial payments.

[282] In my view, there are grounds to believe that each of these statements are capable of being defamatory in that they would tend to lower the reputation of the Catalyst Parties in the eyes of a reasonable person. In accusing Catalyst of having engaged in improper accounting practices concerning a loan that Callidus extended to XTG, for instance, McFarlane is essentially saying that the Catalyst Parties are conducting business in an improper manner, and are therefore not to be trusted. In my view, accusations of this nature are capable of leading a reasonable person to think less of the Catalyst Parties.

[283] Similarly, in advising that the Catalyst Parties were under investigation by the Toronto Police Service and the various regulatory bodies, Baumann, Levitt, and Anderson were suggesting that the Catalyst Parties had been operating their business in an inappropriate fashion. This, too, is capable of lowering the Catalyst Parties’ reputation in the eyes of a reasonable person.

[284] The same can be said of each of Baumann, Levitt, and Anderson’s other communications to Copeland. For example, their statement to Copeland that “Callidus and Catalyst falsely certified that their financial statements were prepared in accordance with IRFS and, in particular, … failed to conduct an appropriate impairment analysis on the assets of the Callidus borrowers and Catalyst funds despite disclosures in their financial statements that such analysis had been done” can reasonably be understood to mean that the Catalyst Parties made material misrepresentations in their financial statements and that their financial disclosure ought not to be trusted. This is capable of lowering the Catalyst Parties’ reputation in the eyes of a reasonable person.

[285] I also reject Anderson’s submission that, as a veteran journalist, Copeland would not have had his views of the reputation of the Catalyst Parties’ lowered by virtue of receiving the information Anderson supplied to him because he would have reviewed and critically assessed the information as a whole before coming to his own independent conclusion. While the nature of the audience reached by the publication (i.e., Copeland) is a factor in determining whether it will be understood in a defamatory sense (see Cimolai v. Hall et al., 2005 BCSC 131, at para. 178; Brown on Defamation, at ¶5.8), it is important to appreciate what exactly the evidence reveals about Copeland. According to Riley’s affidavit, Copeland and Anderson have shared a relationship since at least September 2014 (when Copeland first used Anderson as a source for an article he published in the WSJ). Riley’s affidavit also reveals that Copeland has published articles on some of the same companies against which Anderson has filed whistleblower complaints. In other words, then, Anderson was not some stranger who Copeland would have viewed as untrustworthy. Rather, the evidence suggests that he was a relatively trusted confidant. Indeed, as noted, Copeland vouched for Anderson during the editorial review process. Therefore, when Anderson made these statements to Copeland, it is more likely than not that Copeland would have viewed them as credible and that the Catalyst Parties’ reputations would have declined in his eyes.

[286] In all of the circumstances there is a basis in law and the record, taking into account the stage in the proceeding, to support a finding that McFarlane, Anderson, Baumann, and Levitt’s allegedly defamatory statements to Copeland have a real prospect of success.

[287] Having found that the Catalyst Parties succeed under s. 137.1(4)(a)(i), I must now consider whether they also succeed at the no valid defences stage of the analysis.

[288] In their individual facta, McFarlane, Levitt, and Baumann submit that they are relying on the defences set out in the Moving Defendants’ joint memorandum of law, as well as any defences submitted in the companion facta submitted by the other defendants. Taken together, these defences include: the defence of justification, the defence of responsible communication, the defence of fair comment, the defence of qualified privilege, and the defence of absolute privilege. Anderson, by contrast, submits that he is relying on the defences of fair comment, responsible communication, and qualified privilege. Below, I consider each of these defences.

Defence of Justification (Baumann, Levitt, and McFarlane)

[289] As I have already noted, to succeed under the defence of justification a defendant must show that the alleged defamation results from statements or inferences of fact, and that those facts were true or substantially true: Grant, at paras. 32-33.

[290] In my view, the Catalyst Parties have met their burden of showing that there are grounds to believe that McFarlane, Baumann, and Levitt have no valid defence of justification. In their statements to Copeland, McFarlane, Baumann, and Levitt state that the Catalyst Parties were (1) engaged in improper accounting practices, (2) engaged in improper loan valuation practices, (3) failed to conduct an appropriate impairment analysis on the assets of the Callidus borrowers and Catalyst funds despite disclosures in their financial statements that such analysis had been done, (4) failed to decrease the valuations of their loan collateral when companies in the Callidus portfolio ceased making interest payments or only made partial payments, and (5) were under investigation by the Toronto police department and various regulators.

[291] While all three of these defendants stand by their comments, Riley’s affidavit calls into question the truth of these various allegations. And while one may argue that Riley lacks credibility, based on the materials before me, and keeping in mind that I am only permitted to undertake preliminary assessments of credibility at this stage in the proceedings, I am not prepared to declare Riley’s evidence uncredible. Therefore, taking Riley’s evidence into account, and saving questions of ultimate credibility for a later stage of the proceedings, I find that there are grounds to believe that the defence of justification does not weigh more in favour of these defendants.

Defence of Fair Comment (Anderson, Baumann, Levitt, and McFarlane)

[292] Even if I were to accept that the first four elements of the defence of fair comment (as set out in para. 163) are met, the Catalyst Parties have succeeded in showing that there are grounds to believe that each of Baumann, Levitt, McFarlane, and Anderson were actuated by express malice. As I explain in more detail below, the Catalyst Parties have either commenced (in the case of Baumann and Levitt) or completed (in the case of McFarlane) guarantee enforcement proceedings against all three of these men. These various enforcement proceedings have been highly emotional. Indeed, not only have they spawned additional defamation proceedings (in the case of Baumann), but, within them, each of Bauman, Levitt, and McFarlane have accused the Catalyst Parties of fraud. In a context such as this, there are grounds to believe that the Catalyst Parties will be able to establish malice at trial.

[293] As concerns Anderson, while the evidence of animus is admittedly weaker as against him, the Catalyst Parties have established that there are grounds that Anderson has no valid defence of fair communication as there is a real prospect that Anderson’s statements to Copeland were actuated with malice. For example, prior to performing due diligence on the Catalyst Parties, there is evidence in the record which reveals that he began describing Catalyst and Callidus as a “large, complex fraud” and “Ponzi scheme”. Thus, while Anderson submits that he was merely acting out of financial self-interest, taking the record as a whole, and keeping in mind that I am not permitted to undertake a deep dive at this stage, I am satisfied that the Catalyst Parties have succeeded under s. 137.1(4)(a)(ii) in relation to the defence of fair comment as regards all the defendants, including Anderson.

Defence of Responsible Communication (Anderson, Baumann, Levitt, and McFarlane)

[294] A defendant who acted with malice in publishing a defamatory statement cannot raise the defence of responsible communication because they have, by definition, not acted responsibly: Grant, at para. 125. As I have found that there are grounds to believe that Anderson, Baumann, Levitt, and McFarlane were actuated with malice, it therefore follows that their defence of responsible communication does not possess a real prospect of success.

Defence of Qualified Privilege (Anderson, Baumann, Levitt, and McFarlane)

[295] As I noted in the Defamation Action, an occasion is privileged if the person making the communication has an interest or duty – legal, social or moral – in making the communication to the person to whom it is made, and if that person has a corresponding interest or duty in receiving the communication: Hill, at para. 143. The privilege is qualified in the sense it can be defeated upon proof of malice: Grant, at paras. 30, 34.

[296] Again, as I have found that there are grounds to believe that Anderson, Baumann, Levitt, and McFarlane were actuated by malice, it follows that there are also grounds to believe that the qualified privilege defence is not valid.

Defence of Absolute Privilege (Baumann, Levitt, and McFarlane)

[297] Although raised in the defendants’ joint memorandum of law, none of Baumann, Levitt, nor McFarlane explain how it applies to their impugned statements. Moreover, as the defence only applies to communications that take place during, incidental to, or in the furtherance of judicial or quasi-judicial proceedings, it is difficult to see how it applies here. One could argue that, because many of the accusations provided by the defendants to Copeland are also contained in Anderson’s whistleblower complaints to the OSC, they are “incidental to” quasi-judicial OSC proceedings. In my view, however, the link between the defendants’ communications to Copeland and the OSC whistleblower complaints are too far removed to be considered incidental to it. Further, the whistleblower complaints were just that: whistleblower complaints. In other words, it was not submitted in support of a formal OSC proceeding. This being so, I find that there are grounds to believe that the defence of absolute privilege lacks a real prospect of success.

[298] In summary, then, when it comes to the second set of alleged defamatory statements, I find that the Catalyst Parties have succeeded under s. 137.1(4)(a)(i) and (ii).

(B) Injurious Falsehood

Elements

[299] The elements of injurious falsehood were summarized by the Court of Appeal for Ontario in Lysko v. Braley (2006), 2006 11846 (ON CA), 79 O.R. (3d) 721, at para. 133. They are as follows:

(a) the published statements must be untrue;

(b) the published statements must be made maliciously (i.e., without just cause or excuse); and

(a) The Published Statements Must be Untrue

[300] Injurious falsehood is similar to defamation in that truth is a defence. However, it differs from defamation in two important ways. First, while in defamation the words are presumed to be false once the plaintiff has proved their publication, in injurious falsehood claims the plaintiff has the burden of proving both the publication of the words and their falsity: Burnett v. Tak (1882), 45 L.T. 743 (Ch.). As to the latter requirement, the plaintiff must show that the defendant knew that their representations were false or, alternatively, that they were reckless as to their falsity: Peter Burns & Joost Blom, Economic Torts in Canada, 2nd ed. (Toronto: LexisNexis Canada, 2016), at ¶2.5.

[301] Second, the single meaning rule – which applies in defamation actions and holds that defamatory comments have only the one meaning that a jury finds a reasonable-thinking person would attribute to them – does not apply to injurious falsehood claims. Therefore, a plaintiff can recover even if others might consider the meaning harmless: Burns & Blom, at ¶2.6.

(b) The Published Statements Must be Made Maliciously (i.e., Without Just Cause or Excuse)

[302] The meaning of malice in the context of injurious falsehood claims was articulated by the Supreme Court of Canada in Manitoba Free Press Co. v. Nagy (1907), 1907 46 (SCC), 39 S.C.R. 340. In dealing with the issue of malice, Justice Davies stated, at p. 348, that “malice in this connection is a question of mala fides or bona fides. If the absence of bona fides is shown or may fairly and reasonably be inferred from the facts proved then I take it that the ingredient of malice is sufficiently proved.”

[303] At pp. 352-353, Justice Idington held that “[t]here was not shewn that malice would be implied in satisfying the demands of a vindictive or wicked spirit solely bent of the specific work of destroying the value of the plaintiff’s property … In the recklessness and indifference [that the] facts display [however] I find furnished abundant evidence of malice and hence a legal remedy for such a palpable wrong.”

[304] As Justice Ground noted in Boehringer Ingelheim (Canada) Ltd. v. Bristol-Myers Squibb Canada Inc., 1998 14787 (ON SC), [1998] O.J. No. 1932 (Gen. Div.), at para. 11, Manitoba Free Press thus suggests that when it comes to malice:

[I]t is not necessary to show a predetermined intention to injure the plaintiff or the plaintiff's property or trade, but that it is sufficient, if an absence of bona fides is shown or may fairly and reasonably be inferred from facts proven, and that the reckless publication by the defendant of an untruth, the natural result of which is to produce actual damage to the defendant, is sufficient evidence of malice.

[305] Finally, although not referenced by Justice Ground, it also bears noting that malice is proven on a subjective basis: Burns & Blom, at ¶2.11. This means that honest mistakes – whether they be mistakes of law or mistakes of fact – will negate the presence of malice. This also means that unreasonable mistakes, without more, are insufficient to establish malice: Burns & Blom, at ¶2.11.

(c) The Plaintiff Must Suffer Special Damage

[306] Injurious falsehood is derived from an action on the case. As a result, the plaintiff must assert and prove special damage: Burns & Blom, at ¶2.13. Special damage is pecuniary in nature and includes loss of business: Shapiro v. La Morta (1923), 130 L.T. 622, at 628 (C.A.). The plaintiff must also demonstrate a “causal connection” between the injurious falsehood and the special damage that allegedly resulted from it: Burns & Blom, at ¶2.14.

The Position of the Parties

The Catalyst Parties

[307] As with their defamation claim, the Catalyst Parties’ amended statement of claim pleads that the following sets of allegedly false statements give rise to a claim in injurious falsehood:

• The accusations contained in the WSJ Article.

• Baumann, Levitt, McFarlane, and Anderson’s (amongst other defendants who did not participate in these motions) statements to Copeland.

[308] In their factum, however, the Catalyst Parties focus only on the first set of allegedly false statements that were contained in the WSJ Article. As a result, I will only address this particular injurious falsehood allegation.

[309] As with their defamation claim, the Catalyst Parties submit that Copeland and McFarlane directly contributed to the publication of these accusations and are thus liable on this basis. As for the remaining defendants (i.e., Anderson, Levitt, Baumann, the West Face Parties, and Livesey), the Catalyst Parties submit that each of them, “co-operated, lent aid, supported, and encouraged” the making of the accusations contained in the WSJ Article, and are thus liable as joint tortfeasors.

[310] Turning to the actual elements of the tort, the Catalyst Parties submit that the first element is met because all of the accusations contained in the WSJ Article are untrue.

[311] As regards the tort’s second element, the Catalyst Parties submit that the evidence reveals that each of the Wolfpack Defendants had animus against them. For example, they note that Levitt, McFarlane, and Baumann have been embroiled in acrimonious litigation with them. The Catalyst Parties also state that all of three of these men continue to blame Callidus for the loss of their respective businesses. Further, the Catalyst Parties point to Levitt, McFarlane, and Baumann’s failed attempt to bring a RICO claim and a class action against Catalyst and Callidus, as well as their failed allegations of fraudulent inducement against Callidus, as providing evidence of malice.

[312] Additionally, the Catalyst Parties submit that the West Face Parties have been embroiled in “bitter litigation with Catalyst and Callidus for years.” They stress that the West Face Parties’ animus is also evident from their attempt to have Livesey and the WSJ publish a negative article about Glassman and his family. They also point to notes from McNish, in which she writes that the West Face Parties were on a “crusade” against Glassman.

[313] Finally, as regards Anderson and Copeland, the Catalyst Parties submit that text messages between the two men reveal a clear animus. They also argue that Anderson described Catalyst and Callidus as a “large, complex fraud” and a “Ponzi scheme” before doing any due diligence, and that this reveals animus against them.

[314] Turning to the tort’s final element, that of special damage, the Catalyst Parties rely on the expert opinions submitted by Sunshine and Juneja.

The Wolfpack Defendants

[315] In their joint memorandum of law, the Wolfpack Defendants submit that the Catalyst Parties have failed to show that their injurious falsehood allegation possesses substantial merit.

[316] Beginning with the first element, the Wolfpack Defendants submit that the accusations contained in the WSJ Article were factually accurate statements. As a result, even if these statements reflected adversely on the Catalyst Parties business, the Wolfpack Defendants submit that they cannot ground an injurious falsehood claim.

[317] As to the second element, the Wolfpack Defendants submit that the Catalyst Parties have offered no evidence that the Wolfpack Defendants did not reasonably believe in the truth of their expressions and that this alone is fatal. According to the Wolfpack Defendants, this is fatal because in the absence of an established improper motive, a defendants’ honest belief in their statements negates the mandatory element of malice (and therefore defeats the Catalyst Parties’ injurious falsehood claim): Joshi v. Allstate Insurance Co., 2019 ONSC 4382, at paras. 40-41.

[318] Finally, the Wolfpack Defendants submit that the Catalyst Parties have failed to demonstrate special damage. They rely on their arguments noted above concerning the Dalton Report and the Sutin Affidavit in this regard.

Discussion

[319] I begin by noting that, for my reasons articulated in relation to the first defamation allegation in the Wolfpack Action (see paras. 254-261), I find that there are grounds to believe that each of Anderson, Levitt, Baumann, the West Face Parties, and Livesey co-operated, lent aid, supported, or encouraged McFarlane (in making his statement reproduced in the WSJ Article) and Copeland (in publishing the WSJ Article).

[320] This finding is significant in that if I find that are grounds to believe that there is substantial merit to the allegation that either McFarlane or Copeland are directly liable for injurious falsehood, then the Catalyst Parties will have also met their burden under s. 137.1(4)(a)(i) in relation to Anderson, Levitt, Baumann, the West Face Parties, and Livesey. Again, this is because these latter defendants are merely said to be liable for “co-operating, lending-aid, supporting, and encouraging” McFarlane and Copeland’s allegedly unlawful endeavours. Therefore, as I have already found that there are grounds to believe that Anderson, Levitt, Baumann, the West Face Parties, and Livesey, “co-operated, lent-aid, supported, and encouraged” McFarlane and Copeland, the only remaining question is: are there grounds to believe that the injurious falsehood claim against Copeland or McFarlane has substantial merit? If there is substantial merit to the injurious falsehood claim in relation to either one of these defendants, then the remaining defendants - who, again, are only said to be liable for co-operating, lending-aid, supporting, or encouraging McFarlane and Copeland - will also be liable.

[321] In my view, while there are grounds to believe that the injurious falsehood claim possesses substantial merit as against McFarlane, the same cannot be said for Copeland. Given my finding concerning McFarlane, it therefore follows that there are grounds to believe that the injurious falsehood has substantial merit against McFarlane, Anderson, Levitt, Baumann, the West Face Parties and Livesey.

[322] Below, I explain why I find that there are grounds to believe that the injurious falsehood claim has substantial merit as against McFarlane but not as against Copeland.

(a) Copeland

[323] In my view, the injurious falsehood claim lacks substantial merit as against Copeland for two reasons: (1) his reporting does not appear to have been untrue and (2) there is insufficient evidence in the record which suggests that he was actuated with malice.

[324] Beginning with the first proposition, I rely on my reasons in the Defamation Action. There, it will be remembered, I concluded (at para. 157) that the Dow Jones Defendants, including Copeland, truthfully reported on the fact that Whistleblower Complaints had been made against the Catalyst Parties. This finding applies with equal force here. The same conduct that was at issue in the Defamation Action – that is, Copeland’s publishing of the WSJ Article – is said to give rise to a claim in injurious falsehood in the Wolfpack Action. Therefore, having found that Copeland truthfully reported on the accusations in the Defamation Action, it follows that I must find that Copeland’s reporting was not untrue in relation to this injurious falsehood claim.

[325] Turning to the second proposition, malice, I again rely upon the reasons in the Defamation Action in finding that Copeland did not act with malice. In conducting my analysis with respect to the defence of fair comment I concluded that there were no grounds to believe that Copeland acted with malice. Given that the same conduct is at issue again here, my findings concerning malice in the Defamation Action apply with equal force in the Wolfpack Action.

(b) McFarlane

[326] As noted, the Catalyst Parties have succeeded in establishing that there are grounds to believe that their injurious falsehood claim possesses substantial merit against McFarlane.

[327] As regards the tort’s first element, on truthfulness, I rely on my reasons in the Defamation Action with respect to my analysis concerning the defence of justification. There I held that there were grounds to believe that McFarlane was making accusations against the Catalyst Parties that were, in fact, false. Those findings apply with equal force here. Moreover, I reject McFarlane’s submission that there are grounds to believe he made his accusations with the subjective belief in their truth. Given the evidence of malice, there area grounds to believe that McFarlane made these statements potentially knowing that they were false.

[328] With respect to the tort’s second element, malice, I also rely upon the reasons in the Defamation Action where I found that there were grounds to believe that McFarlane was actuated by malice.

[329] With respect to this tort’s special damage requirement, I find that there are grounds to believe the Catalyst Parties have a real prospect of showing that McFarlane’s accusations resulted in them suffering harm. Once again, I rely upon my analysis in the Defamation Action, specifically referencing the Juneja and Sunshine Reports, while noting the tension that exists between those reports and Callidus’s Q2 reporting, the Dalton Report, and the Sutin Affidavit.

[330] As a result of the above, I find that there are grounds to believe that the injurious falsehood claims have substantial merit against all of the noted defendants except Copeland.

(c) No Valid Defences (McFarlane, Anderson, Levitt, Baumann, Livesey, and the West Face Parties)

[331] Having made these findings, I must now consider whether the Catalyst Parties are able to demonstrate that the defences advanced by McFarlane, Anderson, Levitt, Baumann, the West Face Parties, and Livesey lack a real prospect of success. Having found that there are no grounds to believe that the injurious falsehood claim possesses substantial merit against Copeland, I do not propose to conduct the analysis with respect to him.

[332] Once again, it is important to focus on the various defences that have been advanced by McFarlane since, as joint tortfeasors, the other defendants’ liability ultimately hinges on the liability of McFarlane who is alleged to the person who maliciously published the untrue statements.

[333] Although McFarlane’s factum fails to lay out specific defences to the injurious falsehood claim, he notes that he is relying on the submissions contained in the defendants’ joint memorandum of law, as well as the submissions contained in the companion facta submitted by the other defendants

PART I — INTRODUCTION

PART II — BACKGROUND

Previous Litigation between Catalyst and West Face

The Catalyst Parties’ Out-of-Courtroom Conduct

The Moving Parties’ Out-of-Courtroom Conduct

PART III — THE LEGISLATION AND THE LAW

Section 137.1 of the CJA

Section 137.1(3): The Threshold Burden

Section 137.1(4)(a): The Merits-Based Hurdle

Section 137.1(4)(b): The Public Interest Hurdle

PART IV — THRESHOLD BURDEN ANALYSIS

Discussion

PART V — THE DEFAMATION ACTION

Section 137.1(4)(a)(i): Are there Grounds to Believe that the Defamation Action has Substantial Merit?

The Position of the Parties

The Catalyst Parties

The Dow Jones Defendants

McFarlane

Discussion

Section 137.1(4)(a)(ii): Are there Grounds to Believe that the Dow Jones Defendants and McFarlane have no Valid Defences in the Defamation Action?

Defence of Justification

Defence of Fair Comment

Defence of Responsible Communication

Defence of Qualified Privilege

Defence Under the Libel and Slander Act, R.S.O. 1990, c. L.12, s .3(1)

Section 137.1(4)(b): The Public Interest Hurdle

The Harm Analysis

The Public Interest in Protecting the Impugned Expression

The Weighing of the Public Interest

PART VI — THE WOLFPACK ACTION

(A) Defamation

The Position of the Parties

The Catalyst Parties

(a) The First Set of Alleged Defamatory Statements

(b) The Second Set of Alleged Defamatory Statements

The Wolfpack Defendants

Discussion

(a) The First Set of Alleged Defamatory Statements

Defence of Justification

Defence of Fair Comment

Defence of Responsible Communication

Defence of Qualified Privilege

Defence of Absolute Privilege

Conclusion

(b) The Second Set of Alleged Defamatory Statements

Defence of Justification (Baumann, Levitt, and McFarlane)

Defence of Fair Comment (Anderson, Baumann, Levitt, and McFarlane)

Defence of Responsible Communication (Anderson, Baumann, Levitt, and McFarlane)

Defence of Qualified Privilege (Anderson, Baumann, Levitt, and McFarlane)

Defence of Absolute Privilege (Baumann, Levitt, and McFarlane)

(B) Injurious Falsehood

Elements

(a) The Published Statements Must be Untrue

(b) The Published Statements Must be Made Maliciously (i.e., Without Just Cause or Excuse)

(c) The Plaintiff Must Suffer Special Damage

The Position of the Parties

The Catalyst Parties

The Wolfpack Defendants

Discussion

(a) Copeland

(b) McFarlane

(c) No Valid Defences (McFarlane, Anderson, Levitt, Baumann, Livesey, and the West Face Parties)

Judge

Counsel

Parties

Areas of Law

Fact Patterns

Expert Witnesses

Issues

Statutory Provisions 4

Legal Tests 8

Legislation 4