COURT FILE NO.: CV-21-00662198-0000
DATE: 202200729
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PARK LAWN CORPORATION
Plaintiff
- and –
KAHU CAPITAL PARTNERS LTD., BENEDICT CHENG, and ALEXANDER ZIVIC
Defendants
AND BETWEEN:
KAHU CAPITAL PARTNERS LTD.
Plaintiff by Counterclaim
- and –
PARK LAWN CORPORATION AND J. BRADLEY GREEN
Defendants by Counterclaim
Counsel:
Robert W. Staley, Nathan J. Shaheen, and Andrew N. Sahai for the Plaintiff/Defendants by Counterclaim
Adam J. Wygodny and Bethanie Pascutto for the Defendants/Plaintiff by Counterclaim
HEARD: In writing
REASONS FOR DECISION - COSTS
PERELL, J.
[1] This is a costs decision that raises the question of whether a defendant by counterclaim sued for defamation can finance its own litigation in the main action by bringing an anti-SLAPP motion to dismiss the counterclaim pursuant to s. 137.1 of the Courts of Justice Act.[^1]
[2] On an anti-SLAPP motion, the parties’ respective exposure to costs is prescribed by sections 137.1 (7) and (8), of the Courts of Justice Act, which state:
Costs on dismissal
(7) If a judge dismisses a proceeding under this section, the moving party is entitled to costs on the motion and in the proceeding on a full indemnity basis, unless the judge determines that such an award is not appropriate in the circumstances.
Costs if motion to dismiss denied
(8) If a judge does not dismiss a proceeding under this section, the responding party is not entitled to costs on the motion, unless the judge determines that such an award is appropriate in the circumstances.
[3] In the immediate case, the pertinent background facts to the exercise of the courts discretion as to costs are as follows:
a. In June 2020, Park Lawn Corporation, a funeral home business, sued Andrew Clark, its former CEO for breach of fiduciary duty and breach of confidence.
b. In January 2021, Park Lawn settled with Mr. Clark, and then in May 2021, in the main action in the immediate case, Park Lawn sued Kahu Capital Partners Ltd., Benedict Cheng, and Alexandar (misspelled as Alexander) Zivic, for knowingly assisting Mr. Clark in his alleged misdeeds and for repayment of the fees paid to Kahu Capital.
c. In July 2021, before the Defendants had delivered their defence, J. Bradley Green, who is Park Lawn’s CEO, repeated Park Lawn’s allegations against Kahu Capital in Funeral Service Insider, a trade newsletter for the death-care industry.
d. In July 2021, Kahu Capital defended, and it brought a counterclaim against Park Lawn for defamation to which it joined Mr. Green as a co-defendant.
e. After receipt of the counterclaim, Park Lawn and Mr. Green brought an anti-SLAPP motion to dismiss Kahu Capital’s Counterclaim pursuant to s. 137.1 of the Courts of Justice Act,[^2] as a claim that unduly limits expression on a matter of public interest.
f. In May 2022, I heard the anti-SLAPP motion. By that time, Park Lawn and Mr. Green had delivered a costs outline for $376,567.78, all inclusive, for the motion and the dismissal of the action on a full indemnity basis.
g. Park Lawn and Mr. Green lost the anti-SLAPP motion. I held that although Mr. Green’s statements are about a matter of public interest, there are grounds to believe that there is substantial merit to the counterclaim and that Park Lawn and Mr. Green have no valid defence. Moreover, the harm suffered by Kahu Capital outweighs the public interest in protecting Park Lawn’s and Mr. Green’s freedom of expression on a matter of public interest.[^3]
h. Kahu Capital’s counterclaim did not exhibit the indicia of a SLAPP lawsuit:[^4] (a) there is no history of Kahu Capital using litigation or the threat of litigation to silence critics; (b) Kahu Capital’s financial resources or power do not favour it over those of Park Lawn; (c) Kahu Capital’s counterclaim was not animated by a punitive or retributory purpose; and (d) Kahu Capital would occur more than nominal damages to its reputation and business affairs.
i. Kahu Capital, the successful party on the anti-SLAPP motion seeks full indemnity costs of $49,093.64, all inclusive. Its partial indemnity costs are $31,012.44, all inclusive.
j. Relying on s. 137.1 (8) of the Courts of Justice Act, the unsuccessful Park Lawn submits that there should be no order as to costs.
[4] For the reasons that follow, I award Kahu Capital its partial indemnity costs of $31,012.44.
[5] Before addressing the main issue, which is whether pursuant to the discretion provided by s. 137.1 (8) I can order that Kahu Capital receive costs, I can quickly deal with the scale and the quantum of the costs award that I shall be making.
[6] Applying the normative principles that govern the awarding of costs, the scale should be on a partial indemnity basis. I would not make a punitive award in the circumstances of the immediate case. In Davies v. Clarington (Municipality),[^5] the Court of Appeal held that this scale of costs should only be employed when there was a clear finding of reprehensible conduct on the part of the party against which the cost award is being made. Misguided litigation does not warrant censure, but malicious counter-productive conduct or harassment of the opponent by futile claims may merit an elevated order of costs.[^6] I think that Park Lawn’s anti-SLAPP motion was misguided but it does not merit an elevated scale of costs.
[7] As for quantum, befitting the circumstance that Park Lawn thought it was appropriate to spend $376,567.78, all inclusive, for the motion and the dismissal of the action, it is not surprising that there was not a peep from Park Lawn that $31,012.44, all inclusive, was unreasonable and beyond its reasonable expectations as the losing party.
[8] Turning then to the explanation as to why I am exercising my discretion to award Kahu Capital costs of $31,012.44, all inclusive:
a. If a judge dismisses a proceeding pursuant to the anti-SLAPP legislation, the moving party is entitled to costs on the anti-SLAPP motion and of the proceeding on a full indemnity basis, unless the judge determines that such an award is not appropriate in the circumstances.[^7]
b. If the judge does not grant the anti-SLAPP motion, the responding party is not entitled to costs on the motion, unless the judge determines that such an award is appropriate in the circumstances.[^8]
c. The awarding of costs remains a matter of judicial discretion and the motion judge, when deciding how he or she should exercise his or her discretion, will be guided by the considerations that guide the exercise of discretion with respect to costs in other civil proceedings.[^9]
[9] Thus, pursuant to 137.1 (7) and 137.1 (8), it seems that Park Lawn had everything to gain and little to lose in bringing its anti-SLAPP motion. If it won the motion, it would get costs on a full indemnity basis. If it lost the motion, it would not have to pay costs. This “heads I win, tails you lose” approach to the costs of an anti-SLAPP motion is by design. These sections of the Courts of Justice Act denying a successful responding party his or her costs are designed to encourage defendants, who have been sued over expressions on matters of public interest, to bring an anti-SLAPP motion for an early dismissal of the claims. The costs provisions ease the financial burden and risk placed on the defendant who seeks an early termination of what it claims is a SLAPP.[^10]
[10] However, since the statutory purpose of the anti-SLAPP regime is to protect expressions on matters of public interest where the plaintiff’s statements do not relate to a matter of public interest and the responding defamation lawsuit is not brought for an improper purpose, there is justification for awarding costs to the defamed party whose lawsuit will be continuing.[^11]
[11] I agree with Park Lawn’s submission that in applying s. 137.1(8) of the Courts of Justice Act, the mere fact that an anti-SLAPP motion is dismissed, and the defamation action allowed to proceed is not enough to justify a costs award and additional justification is needed, otherwise the statutory purpose of 137.1 (8) would be undermined.[^12]
[12] In applying s. 137.1 (8), the case at bar is not so straightforward as one in which there is no expression on a matter of public interest. That straightforward case is not available because I concluded that when Park Lawn’s CEO, Mr. Green, repeated Park Lawn’s allegations in its Statement of Claim to Funeral Service Insider, a trade newsletter for the death-care industry, it was speaking in the public interest. Indeed, it was Mr. Green’s view that he was acting in the public interest in speaking about Park Lawn’s lawsuit.
[13] Although the case at bar is not so straightforward as a case where the allegedly defamatory expression is not a matter of public interest, I conclude that there are numerous factors that would justify an award of costs to a successful responding party on an anti-SLAPP motion pursuant to the discretion provided to the court by s. 137.1 (8) of the Courts of Justice Act.
[14] Factor one, it seems that Mr. Green and Park Lawn did not think it was good enough to bring the matter of Kahu Capital’s nefarious connection to Mr. Clark to the attention of the public in the privilege-protected environment of court proceedings, but it thought that it was necessary to make Park Lawn’s case and to bring Park Lawn’s court allegations to the attention of the public in the non-privilege protected environment of a trade publication. This unnecessary provocative litigating in the public domain is a factor favouring a costs award to Kahu Capital.
[15] Factor two, it seems that secure in the knowledge that his statements to the media would surely be regarded as matters of public interest, Mr. Green and Park Lawn thought they could win in the court of public opinion and defame Kahu Capital without risk of having to pay costs should they lose the anti-SLAPP motion. This arrogance about the reach of the court’s costs jurisdiction is a factor factoring a costs award to Kahu Capital.
[16] Factor three, jurisprudentially, Park Lawn was wrong in thinking that the court’s jurisdiction to order costs to the successful responding party on an anti-SLAPP motion is foreclosed simply because the unsuccessful party inside or outside the court was discussing a matter of public interest. The risk of an adverse costs award is diminished not obliterated. This misapprehension of the court’s jurisdiction is a factor favouring a costs award to Kahu Capital.
[17] Factor four, its seems that secure in the knowledge that Mr. Green’s statement to the media would surely be regarded as a matter of public interest, win or lose, Park Lawn thought it could costs monger and that it was at liberty to expend close to $400,000 on a case in which pleadings have not closed and it had not pleaded to defend the counterclaim. This opportunist cost-mongering is a factor favouring a costs award to Kahu Capital.
[18] Factor five, it seems that secure in the knowledge that Mr. Green’s statements to the media would surely be regarded as matters of public interest, Park Lawn thought that by its risk-free anti-SLAPP motion, it could pull off the brilliant tactical maneuver of using the full indemnity costs award for the dismissal of the defamation action to finance Park Lawn’s main action where it would attempt to prove the truth of the defamatory allegations. This unsuccessful tactical ploy is a factor favouring a costs award to Kahu Capital.
[19] The pertinence of these factors is confirmed by the Court of Appeal’s decision in Sokoloff v. Tru-Path Therapy Services Ltd.,[^13] a case in which the successful responding party was awarded costs on a partial indemnity basis. Justice Huscroft stated at paragraphs 45-47:
I would add these comments. First, although the dismissal of a motion at the 137.1(3) threshold stage is a relevant consideration in determining whether to award costs to a plaintiff, it is not determinative of the appropriateness of a costs order. There will be cases in which the assertion of the public interest is wholly lacking in merit, but there will also be cases in which the moving party may have an arguable basis to assert that their expression relates to a matter of public interest. The award of costs in the former may be easier to justify in the former than the latter cases, but every case is different and the law will no doubt continue to develop in this regard.
Second, although in Pointes the Supreme Court deprecated reliance on the traditional SLAPP indicia identified by this court – (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” – it did so in the context of the inquiry at the weighing stage, s. 137.1(4)(b), in order to ensure the primacy of the text of the statute and the considerations it sets out: see Pointes (SCC), at paras. 78-80. The court did not hold the traditional SLAPP indicia are irrelevant – they may bear on the analysis under s. 137.1(4)(b), provided the analysis remains tethered to the statutory criteria – and, in any event, the court said nothing about their relevance to the question of costs.
Finally, as Doherty J.A. explained in Pointes (ONCA), at para. 73, a motion under s. 137.1 is meant to be a “screening or triage device designed to eliminate certain claims at an early stage of the litigation process”. It is not an alternative means of trying a claim nor is it a form of summary judgment, and it is important to maintain a sense of proportionality where costs are concerned. The motion judge’s decision to reduce the respondents’ partial indemnity costs was appropriate.
[20] I think that Park Lawn was too clever for its own good and that there is more than enough justification here to award partial indemnity costs to Kahu Capital payable within thirty days.
[21] Order accordingly.
Perell, J.
Released: July 29, 2022
COURT FILE NO.: CV-21-00662198-0000
DATE: 20220729
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
PARK LAWN CORPORATION
Plaintiff
- and –
KAHU CAPITAL PARTNERS LTD., BENEDICT CHENG, and ALEXANDER ZIVIC
Defendants
AND BETWEEN:
KAHU CAPITAL PARTNERS LTD.
Plaintiff by Counterclaim
- and –
PARK LAWN CORPORATION AND J. BRADLEY GREEN
Defendants by Counterclaim
REASONS FOR DECISION – COSTS
PERELL, J.
Released: July 29, 2022
[^1]: R.S.O. 1990, c. 43.
[^2]: R.S.O. 1990, c. 43.
[^3]: Park Lawn Corp. v. Kahu Capital Partners Ltd., 2022 ONSC 3341.
[^4]: Levant v Demelle, 2022 ONCA 79; Platnick v Bent, 2018 ONCA 687at para 99.
[^5]: (2009), 2009 ONCA 722, 100 O.R. (3d) 66 at paras. 28–40 (C.A.).
[^6]: Fugeh v. Stewart, 2021 ONSC 3907 (Div Ct); Smith Estate v. Rotstein, 2010 ONSC 4487 at para. 29, rev’d in part 2011 ONCA 491, leave to appeal refused [2011] S.C.C.A. No. 441; Davies v. Clarington (Municipality) (2009), 2009 ONCA 722, 100 O.R. (3d) 66 at para. 45 (C.A.); Willmot Estate v. Willmot, [2007] O.J. No. 2574 (S.C.J.); Wigle v. Vanderkruk, [2005] O.J. No. 3676 at para. 10 (S.C.J.); Dube v. Penlon Ltd. (1992), 1992 CanLII 7449 (ON CA), 10 O.R. (3d) 190 at paras. 7 and 8 (Gen. Div.); Apotex Inc. v. Egis Pharmaceuticals (1991), 1991 CanLII 2729 (ON SC), 4 O.R. (3d) 321 (Gen. Div.).
[^7]: B.W. (Brad) Blair v. Premier Doug Ford, 2021 ONSC 695, var’d 2021 ONCA 841; Subway v. Canadian Broadcasting Corporation, 2020 ONSC 1263; Veneruzzo v. Storey, 2018 ONCA 688.
[^8]: Thompson v. Cohodes, 2017 ONSC 2590; Accruent LLC v. Mishimagi, 2016 ONSC 6924.
[^9]: Fortress Real Developments Inc. v. Rabidoux, 2018 ONCA 686 at paras. 60–66.
[^10]: Veneruzzo v. Storey, 2018 ONCA 688 at paras. 34–40; Accruent LLC v. Mishimagi, 2016 ONSC 6924 at para. 4.
[^11]: Veneruzzo v. Storey, 2018 ONCA 688 at paras. 34–40; Levant v. Day, 2018 ONSC 6236, aff’d 2019 ONCA 244, leave to appeal refused [2019] S.C.C.A. No. 194.
[^12]: Ferreira v Da Costa, 2019 ONSC 2990
[^13]: 2020 ONCA 730.