COURT FILE NO.: CV-19-625543-00CL

DATE: 20221128

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: CANADIAN TIRE CORPORATION, LIMITED, Plaintiff

AND:

EATON EQUIPMENT LTD., SCOTT MILBURN, a.k.a. SCOTT EATON,

SERVANTAGE DIXIE SALES CANADA INC., CARLEIGH MILBURN,

INTELLECTUAL INVENTIVE INC., CITRUS GROVE MORTGAGECO

LTD., TAMMY DIANE ROBERTSON, SHANE ROBERTSON, LIBERO

EVERETT TASSONE, APPSLACK LTD., APPAKISS LTD., and

APPNATTY LTD., Defendants

BEFORE: Justice Cavanagh

COUNSEL: Sandra Majic, for the defendants Eaton Equipment Ltd., Scott Milburn, Carleigh Milburn, Tammy Robertson, Intellectual Inventive Inc., Citrus Grove MortgageCo. Ltd., Appakiss Ltd., Appslack Ltd., Appnatty Ltd., Shane Robertson and Libero Tassone (Moving Parties)

Colin Pendrith and Jessica L. Kuredjian for the Plaintiff (Responding Party)

HEARD: November 15, 2022

ENDORSEMENT

Introduction

[1] The Defendants Eaton Equipment Ltd. (“Eaton”) and Scott Milburn (together, the “Milburn Defendants”) and the Defendants Carleigh Milburn, Tammy Robertson, Intellectual Inventive Inc., Citrus Grove MortgageCo. Ltd., Appakiss Ltd., Appslack Ltd., Appnatty Ltd., Shane Robertson and Libero Tassone (together, the “Robertson Defendants”) move pursuant to s. 137.1(3) of the Courts of Justice Act (“CJA”) for an order dismissing this action on the ground that the action arises from an expression made by the moving parties that relates to a matter of public interest.

[2] On a motion under s. 137.1 of the CJA, the moving party has the threshold burden to demonstrate on a balance of probabilities that (i) the action arises from an expression made by the moving party, and that (ii) the expression relates to a matter of public interest.

[3] For the following reasons, the moving parties’ motion under s. 137.1 of the CJA is dismissed.

Procedural Background

[4] This action was commenced by Canadian Tire Corporation, Limited (“Canadian Tire”) against Eaton, Mr. Milburn, and Servantage Dixie Sales Canada Inc. (“Servantage”) by a Statement of Claim issued on August 14, 2019.

[5] On August 19, 2022, Penny J. made an order on a motion by Canadian Tire, without notice, in which he granted a Mareva injunction against Mr. Milburn and Eaton restraining them from dealing with their assets wherever situated.

[6] The Statement of Claim was amended on September 9, 2019. Additional parties were added as defendants.

[7] The Milburn Defendants and the Robertson Defendants brought a motion to set aside the Mareva injunction. On December 21, 2020, this motion was dismissed by Koehnen J.

[8] On April 23, 2021, the Divisional Court released an endorsement dismissing the motion by the Milburn Defendants and the Robertson Defendants for leave to appeal the Order of Koehnen J. dated December 21, 2020.

[9] The Amended Statement of Claim was amended on March 19, 2021 and is titled the Second Fresh as Amended Statement of Claim.

[10] The Milburn Defendants delivered a Statement of Defence and Crossclaim and Counterclaim. The Robertson Defendants delivered a Statement of Defence. Servantage delivered a Statement of Defence and Crossclaim. The Milburn Defendants issued a Third Party Claim on October 14, 2021.

[11] The Milburn Defendants and the Robertson Defendants sought to schedule a motion to be brought under s. 137.1 of the CJA dismissing the action. In his endorsement dated October 7, 2021, Justice Koehnen directed that the proposed motion first proceed to a determination of whether the moving defendants satisfy the threshold requirement in s. 137.1(3) of the CJA, that is, whether they satisfy the judge hearing the motion that the action arises from an expression made by the moving defendants that relates to a matter of interest. In his endorsement dated October 29, 2021, Justice Corbett of the Divisional Court directed that the bifurcation order remains in force, subject to discretion of the motion judge.

[12] In his endorsement dated October 19, 2021, Koehnen J. reserved January 27, 2022 for the proposed motion under s. 137.1 of the CJA. Later, the moving parties requested more time to prepare their motion material, so the motion was not heard that day.

[13] In February 2022, counsel for the Robertson Defendants advised that his clients were in the process of retaining new counsel. New counsel was retained.

[14] Case management conferences were held on April 22, 2022 and May 13, 2022 to address the timetable for the moving parties’ motion. In my endorsement dated May 13, 2022 following a case management conference, I directed that the motion proceed first in accordance with the endorsements of Koehnen J. and Corbett J. to determine whether the moving parties satisfy the threshold requirement by showing on a balance of probabilities that the action arises from an expression made by the moving defendants that relates to a matter of public interest. I confirmed that counsel for the moving parties would revise the draft motion material to limit the relief sought on the motion to the anti-SLAPP relief under s. 137.1 of the CJA.

[15] The parties did not agree on whether the moving parties were entitled to examine witnesses under rule 39.03. A case conference was arranged for June 6, 2022 to address whether examinations should proceed. On June 6, 2022, on consent of the parties, the case conference proceeded as a motion by Canadian Tire to quash the summonses to witnesses that had been served.

[16] On June 24, 2022, I released an endorsement quashing the summonses to witnesses served by the moving parties on the basis that they had failed to show that the persons to be examined may be able to give evidence that is relevant to issues at the threshold stage of the motion to be brought under rule 137.1 of the CJA.

[17] The hearing date for the proposed motion was then scheduled and a timetable was approved.

Canadian Tire’s claim as pleaded and the moving parties’ defences as they relate to s. 137.1

[18] To provide context for my analysis, I summarize Canadian Tire’s claim as pleaded and the portions of the statements of defence of the Milburn Defendants and the Robertson Defendants that relate to the motion under s. 137.1 of the CJA.

[19] In the Second Fresh as Amended Statement of Claim, Canadian Tire claims against the Milburn Defendants damages for fraud, fraudulent misrepresentation, misappropriation and conversion, knowing receipt, knowing assistance, and unjust enrichment and, in the alternative, disgorgement of any and all proceeds and profits received and earned by the Milburn Defendants from the alleged fraudulent scheme described in the Statement of Claim. Canadian Tire claims against the Robertson Defendants leave to issue a certificate of pending litigation, declaratory relief in respect of a mortgage, damages for misappropriation and conversion and unjust enrichment, and disgorgement of proceeds and profits from the alleged fraudulent scheme.

[20] Canadian Tire pleads that Servantage, its vendor for the administration of Canadian Tire’s After Sales Service Program (“ASSP”) (that allowed customers to return defective products for repair and part replacement), appointed Eaton as an authorized service centre to perform repairs and part replacements under the ASSP. Canadian Tire alleges that the Milburn Defendants perpetrated a fraudulent scheme against it by asserting an entitlement to and receiving payment for work Eaton had not performed by using fraudulent receipts and invoices to create the illusion that legitimate repairs were taking place when, in fact, they were not. Canadian Tire pleads that the Milburn Defendants made fraudulent transfers of funds that were misappropriated from Canadian Tire to other defendants.

[21] In their Statement of Defence, the Milburn Defendants plead, among other things, that Canadian Tire’s action was initiated to further an indirect, collateral and improper purpose. They plead that Canadian Tire’s action was maliciously intended to harm the Milburn Defendants by discrediting and bankrupting them, such that they would be unable to, obstructed from, or discouraged from going public or communicating to relevant authorities their knowledge of Canadian Tire’s sales of allegedly defective product (including sales of imported tools from China allegedly known to have high defect rates) and/or its illegal conduct in allegedly violating electrical regulatory and consumer protection laws. The Milburn Defendants plead that Canadian Tire deliberately sought to neutralize the Milburn Defendants as potential whistleblowers or witnesses. The Milburn Defendants plead that Canadian Tire’s action is for the predominant purpose of injuring them.

[22] The Milburn Defendants plead that Canadian Tire’s action against them is a SLAPP (Strategic Lawsuit Against Public Participation) and arises from their expressions at and surrounding the presentation to Canadian Tire regarding its faulty products and its contraventions of electrical safety laws and regulations which, they plead, were expressions relating to a matter of public interest. The Milburn Defendants plead and rely on s. 137.1 of the CJA.

[23] The Robertson Defendants, in addition to their other pleadings, plead that due to the actions of the Milburn Defendants to address the allegedly defective products sold by Canadian Tire and its alleged contraventions of electrical safety laws and regulations, Canadian Tire conspired with other parties to remove the Milburn Defendants from the repair operations and discredit or otherwise neutralize them from serving as witnesses or whistle-blowers to Canadian Tire’s misconduct. The Robertson Defendants plead that Canadian Tire’s action is a SLAPP which arises from the Milburn Defendants’ expressions at and surrounding the presentation to Canadian Tire regarding its alleged faulty products and its alleged contraventions of electrical safety laws and regulations, which were expressions relating to a matter of public interest. The Robertson Defendants plead and rely on s. 137.1 of the CJA. The Robertson Defendants plead that Canadian Tire’s SLAPP action against the Milburn Defendants is, as against them, a SLAPP action by extension (or alternatively an abuse of process) on the basis that the Robertson Defendants have been included in the lawsuit as leverage to be used against the Milburn Defendants.

Analysis

Have the moving parties discharged their initial onus at the threshold stage of this motion under s. 137.1 of the CJA of showing that Canadian Tire’s action arises from an expression that relates to a matter of public interest?

[24] Section 137.1(3) of the CJA provides:

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

[25] In Subway Franchise Systems of Canada, Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 25, the Court of Appeal for Ontario, at paras. 31-33, explained the role played by the initial threshold under s. 137.1(3) of the CJA:

The gateway to s. 137.1 is the requirement, in s. 137.1(3), that the defendant show that the proceeding against it arises from an expression it made that relates to a matter of public interest. The provisions that contemplate dismissal of the proceeding unless the plaintiff satisfies certain criteria are not engaged unless this threshold requirement is met. “This is a threshold burden, which means that it is necessary for the moving party to meet this burden in order to even proceed to s. 137.1(4) for the ultimate determination of whether the proceeding should be dismissed”: Pointes (SCC), at para. 21.

The role played by the threshold requirement is easily understood in light of the purposes set out in s. 137.1(1). These include the encouragement of persons to express themselves on matters of public interest, and the discouragement of the use of litigation to unduly limit such expression. Where a defendant, on a motion under s. 137.1, meets the threshold requirement, it has shown two things: (i) the proceeding arose from the defendant having done what the law seeks to encourage - express itself in a matter of public interest, and (ii) the proceeding might be litigation being used to unduly limit such expression.

But if the defendant does not meet the threshold requirement, because it does not show that the claim arises from such an expression, none of the purposes enumerated in s. 137.1(1) are engaged. The provisions requiring dismissal of the proceeding, unless the plaintiff can satisfy the criteria set out in s. 137.1(4)(a) and (b), are inapplicable.

[26] The moving parties rely on evidence from Mr. Milburn and Shane Robertson that at a meeting with representatives of Canadian Tire on May 1, 2018, Mr. Milburn complained about privacy law violations by Canadian Tire and Servantage and about Canadian Tire selling allegedly defective and dangerous tools that were not approved by the Canadian Standards Association (CSA) and, therefore, could not be sold in Canada. Canadian Tire denies these allegations. The moving parties contend that the evidence shows that after this meeting, Canadian Tire ordered Servantage to terminate Servantage’s agreement with Eaton and directed Servantage not to pay Eaton for services already rendered and that Servantage followed this direction and terminated the agreement with Eaton. The moving parties say that the evidence establishes that Canadian Tire directed Servantage to cancel Eaton’s agreement because at the time, Eaton was confronting Canadian Tire and Servantage about privacy law violations and defective tools.

[27] The moving parties assert that the statements made by Mr. Milburn at and after the May 1, 2018 meeting regarding alleged violations of privacy laws by Canadian Tire and Servantage and regarding allegedly defective tools are expressions on matters of public interest. The moving parties contend that the evidence shows that these expressions served as the impetus for Canadian Tire’s claims in the action. The moving parties submit the evidence belies Canadian Tire’s assertions that the impetus for its action is that the Milburn Defendants engaged in fraud. The moving parties submit that Canadian Tire’s claim is a direct response to the expressions by Mr. Milburn and Eaton regarding privacy violations and sales of defective and non-CSA approved tools.

[28] In my endorsement released on June 24, 2022 on Canadian Tire’s motion to quash summonses to witnesses, at paras. 24-30, I reviewed the legal principles in respect of the meaning of “arises from” as it appears in s. 137.1(3) of the CJA as explained by the Supreme Court of Canada in 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22:

In 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, the Supreme Court of Canada was asked to decide whether an action can proceed or must be dismissed under s. 137.1 of the CJA and, in so doing, the Court offered guidance on how to properly apply the framework set out in s. 137.1 of the CJA.

In Pointes, a land developer brought an action against Pointes Protection Association, a not-for-profit-corporation, and six of its members, in the context of Pointes Protection’s opposition to a proposed subdivision development by the developer. The developer claimed that the testimony of the association’s president at a hearing of the Ontario Municipal Board breached an agreement between the developer and Pointes Protection that imposed limitations on Pointes Protection’s conduct in respect of the approvals sought by the developer from the relevant authorities.

The Supreme Court of Canada, at para. 24, addressed the meaning of “arises from” as it appears in s. 137.1(3) of the CJA:

Second, what does “arises from” require? By definition, “arises from” implies an element of causality. In other words, if a proceeding “arises from” an expression, this must mean that the expression is somehow causally related to the proceeding. What is crucial is that many different types of proceedings can arise from an expression, and the legislative background of s. 137.1 indicates that a broad and liberal interpretation is warranted at the s. 137.1(3) stage of the framework. This means that proceedings arising from an expression are not limited to those directly concerned with expression, such as defamation suits. A good example of a type of proceeding that is not a defamation suit, but that nonetheless arises from an expression and falls within the ambit of s. 137.1(3), is the underlying proceeding here, which is a breach of contract claim premised on an expression made by the defendant (this is explored in further detail in Part IV of these reasons). Indeed, the APR [the Anti-SLAPP Advisory Panel mandated by the Attorney General of Ontario] explicitly discouraged the use of the term “SLAPP” in the final legislation in order to avoid narrowly confining the s. 137.1 procedure (para. 22), and the legislature obliged.

In Pointes, at footnote 1, Côté J. wrote that she does not believe that a precise level of causation needs to be identified, as courts have consistently been able to grapple with and apply the “arising from” standard.

In Pointes, Côté J. referred, at para. 90, to the developer’s statement of claim in the breach of contract action in which the developer took the position that the testimony of the association’s president at the public hearing breached the agreement in question. Côté J. concluded, at para. 102, that the proceeding “arises from” the expression (the testimony at the public hearing) because the action for breach of contract is “premised” on an alleged breach of the agreement in question resulting from the expression. Côté J. held that there was a clear nexus between the expression and the underlying proceeding.

[29] In Subway, the Court of Appeal for Ontario addressed the question of whether the proceeding arose from an expression in the context of the plaintiff’s claim in negligence against the defendant. The Court of Appeal, at paras. 39, explained when the requirement that the proceeding arise from an expression is met, citing the decision of that court in Pointes:

In Pointes, the claim was not for defamation; it alleged that the defendant had breached a contract by making certain statements and offering certain opinions at an Ontario Municipal Board hearing. Section 137.1 was held to apply to that claim. As this court explained in Pointes (ONCA), the requirement that the proceeding arise from an expression is met where the expression “grounds” the claim. Putting it another way, this court considered the requirement to have been met because the claim “targets” the expression: at paras. 52, 103.

[30] In Schwartz et al. v. Collette, 2021 ONSC 2138, the court was called on to decide whether an action that is motivated by a desire to silence expressions by the defendant that relate to a matter of public interest is subject to dismissal under s. 137.2 of the CJA where the claim is not grounded in such expressions. In Schwartz, the motion judge dismissed certain claims made in an action which related to expressions by the defendant in relation to a matter of public interest. The motion judge invited additional submissions to assist her to determine whether, given her findings, she was required to dismiss the entire proceeding, regardless of the nature of the plaintiff’s other claims, where the other claims related to (i) an expression that could not be said to relate to a matter of public interest, or (ii) conduct unrelated to a public interest expression. The motion judge held, at para. 21, that “unless the remaining claims can be said to be grounded in matters related to public interest expression” [emphasis in original], she did not have the discretion to dismiss the other claims, despite having previously found that the entire action is motivated by a desire to silence public interest expression by the defendant.

[31] In reaching this conclusion, the motion judge in Schwartz, at para. 39, addressed whether it is open to the court on a s. 137.1 motion to inquire into and characterize the “true” nature of the proceeding as a whole. The motion judge held that the court should look at the facts grounding the claim, but not to the extent that the court should be attempting to assess motive. The motion judge held that if facts underlying the other claims are not grounded in public interest expression, she could not conclude that the legislature intended to provide for the dismissal of those claims.

[32] I agree with and follow the holding in Schwartz that the motive of a claimant for bringing the proceeding in question is not a relevant consideration at the threshold stage of the analysis on a motion under s. 137.1 of the CJA. I reached the same conclusion in my endorsement released on June 24, 2022.

[33] The facts grounding Canadian Tire’s claim are pleaded in its Second Fresh as Amended Statement of Claim and, on the facts pleaded, the claim is not premised or grounded on any expressions made by the Milburn Defendants or any other defendant. Canadian Tire’s claim does not target an expression made by any of the defendants.

[34] I conclude that the moving parties have failed to show that Canadian Tire’s action arises from an expression made by any of the defendants.

Other relief sought by the moving parties

[35] In their Notice of Motion for this motion, the moving parties seek an order dismissing Canadian Tire’s action pursuant to s. 137.1 of the CJA. The moving parties also seek “[a]n Order for $15,000,000 (fifteen million dollars in damages)”.

[36] The moving parties, in their factum and at the hearing of this motion, also sought (i) an Order setting aside and discharging the Mareva injunctions and Norwich Orders granted on motions by Canadian Tire, and (ii) setting aside the Certificate of Pending Litigation granted in respect of a property in Niagara Falls, Ontario.

[37] I declined to hear the motion for this relief because the relief to be sought on this motion is limited to whether the moving parties have satisfied their onus at the threshold stage of the analysis under s. 137.1 of the CJA.

Disposition

[38] For these reasons, the motion by the Milburn Defendants and the Robertson Defendants for an order dismissing the action pursuant to s. 137.1 of the CJA is dismissed.

[39] Canadian Tire seeks costs of this motion.

[40] Section 137.1(8) of the CJA provides:

If the judge does not dismiss the 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.

[41] In Veneruzzo v. Storey, 2018 ONCA 688, at paras. 38-39, the Court of Appeal for Ontario addressed the costs provisions in s. 137.1 of the CJA:

The motion judge’s reasons for ordering costs in favour of the respondents are consistent with the rationale for the costs provisions in s. 137.1. Those sections are designed to encourage defendants, who have been sued over expressions on matters of public interest, to bring s. 137.1 motions for an early dismissal of those claims. The costs provisions ease the financial burden and risk placed on the defendant who seeks an early termination of what it claims is a SLAPP: Accruent LLC v. Mishimagi, 2016 ONSC 6924, 9 C.P.C. (8th) 136, at para. 4

The purpose underlying the costs provisions in s. 137.1 disappears when the lawsuit has none of the characteristics of a SLAPP, and the impugned expression is unrelated to a matter of public interest. In those circumstances, it is not the initial lawsuit challenging the expression that represents a potential misuse of the litigation process, but rather the s. 137.1 motion. A costs order denying a successful respondent its costs on a s. 137.1 motion, even though the lawsuit was not brought for an improper motive and the claim did not relate to a matter of public interest, could be seen as encouraging defendants to bring meritless s. 137.1 motions.

[42] Canadian Tire’s action arises out of an alleged fraud. This action has none of the characteristics of a SLAPP. The moving parties placed considerable evidence before the court on this motion in relation to the alleged motive for this action, none of which was relevant to the threshold question raised on this motion. I made the same holding in my June 24, 2022 endorsement. The motion by the moving parties has caused considerable delay in the advancement of this action.

[43] I conclude that in these circumstances, it is appropriate that costs of this motion be awarded to Canadian Tire.

[44] Canadian Tire seeks costs on a substantial indemnity scale. In support of this request, Canadian Tire relies on Barber v. CannaPharmaRX, 2021, ONSC 6008 where the motion judge awarded costs on a substantial indemnity scale on a motion for an injunction after concluding that the motion had no reasonable prospect of success and should not have been brought.

[45] Although, in my view, this motion was not well-founded, I am unable to conclude that the conduct of the moving parties by bringing the motion qualifies as reprehensible conduct that would justify an award of costs on an elevated scale. I award costs on a partial indemnity scale.

[46] Canadian Tire seeks costs on a partial indemnity scale in the amount of $25,906. I am satisfied that the amount claimed is reasonable and proportionate having regard to the factors in rule 57.01 of the Rules of Civil Procedure.

[47] The moving parties are ordered to pay costs to Canadian Tire fixed in the amount of $25,906 within 30 days.

Cavanagh J.

Date: November 28, 2022