ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

A&H ASSET AUCTIONS INC. Plaintiff

– and –

ABC CORPORATION, BETTER BUSINESS BUREAU OF CENTRAL ONTARIO INC., CANADA REVENUE AGENCY, CANADA (COMMISSIONER OF COMPETITION), CANADA (MINISTER OF PUBLIC WORKS AND GOVERNMENT SERVICES CANADA), CANADA (MINISTER OF CANADIAN HERITAGE), CANADA (ATTORNEY GENERAL), ANGELA SHEN, DARREN KLOEZE, PABLO SOBRINO, ROBB FLEMING, JOEL GIROUARD, DAN WILCOCK, MIKE FABBRO, SANDI WRIGHT, JOHN DOES, JANE DOES and MARLENE CROTEAU Defendants

Counsel: Young Park for the Plaintiff Kevin Dias, Wendy Wright, Fozia Chaudary, and Sarah Mackenzie for the Defendants Attorney General of Canada, Mike Fabbro, Public Works and Government Services Canada and Canada Revenue Agency Sheldon Inkol for the Better Business Bureau of Central Ontario Inc.

HEARD: June 15, 2023

REASONS FOR JUDGMENT

CAVANAGH J.

Introduction

[1] The Plaintiff A&H Asset Auctions Inc. (“A&H”) commenced this action for damages and other relief against the Defendants including Canada Revenue Agency, Minister of Public Works and Government Services Canada, Attorney General of Canada and Mike Fabbro (the “Crown Defendants”) and the Better Business Bureau of Central Ontario Inc. (“BBB”).

[2] The Crown Defendants and the BBB have brought separate motions pursuant to s. 137.1 of the Courts of Justice Act for an order dismissing the action against them.

[3] For the following reasons, these motions are granted.

Background Facts

Parties

[4] A&H Asset Auctions Inc. (“A&H”) is a business that specializes in marketing jewelry.

[5] Bailiff Asset Recovery (the “Bailiff”) is a licensed Bailiff. Rick Schwarzer is the Bailiff’s principal.

[6] Canada Revenue Agency (“CRA”) is an agency of the Government of Canada that administers tax laws for the Government of Canada.

[7] Public Works and Services Canada (“PWGSC”) is a service agency that provides the departments of the Government of Canada with support for their services. GC Surplus is an arm of PWGSC. It is responsible for the sale of surplus federal goods.

[8] Michael Fabbro was at material times the Senior Manager and Business Development Manager of GC Surplus. Mr. Fabbro’s duties included responding to public inquiries concerning the sale of surplus government assets.

[9] Better Business Bureau of Central Ontario Inc. (“BBB”) is a not-for-profit corporation whose mission is to be the leader in advancing marketplace trust.

Agreements with respect to seizure and sale of certain gemstones

[10] On February 17, 2009, the CRA retained the Bailiff to seize and sell gemstones owned by a tax debtor.

[11] On June 24, 2009, the Bailiff entered into a contract with A&H (“Agreement”) to sell the gemstones at A&H’s public auctions.

[12] On March 30, 2010, the Bailiff and A&H agreed to an addendum to the Agreement in which the Bailiff authorized A&H to set the gemstones in jewelry. The Bailiff notified the CRA about the addendum and advised that it had required A&H to continue to make remittances from the sales of the gems directly to CRA and to provide the CRA with sales reports.

Statement made by CRA to the CBC

[13] On February 11, 2013, the CRA received an inquiry from Radio Canada, part of the Canadian Broadcasting Corporation (“CBC”), asking the CRA to confirm whether there was a relationship between it and A&H.

[14] The CRA sent a response to the CBC, the English translation of which reads in part:

CRA confirms that there is no contract or arrangement between the CRA and Asset Auctions. Please note that the CRA does not proceed with the seizing or selling of objects. It is bailiffs or sheriffs who execute these actions following the CRA’s directions.

[15] On February 11, 2013, CBC published a television report and article which both reported that “Canada Revenue Agency states that there is no contract or arrangement with Asset Auctions”.

Statements made by the BBB

[16] The BBB first contacted GC Surplus about A&H on December 7, 2012. The BBB’s representative advised that the BBB was investigating A&H and asked about its relationship with the GOC and whether “A&H Asset Auctions is authorized to auction in the fashion that they advise on their website.”

[17] In response to this request, Mr. Fabbro advised that A&H “may currently be selling seized government jewels” but that GC Surplus had “no relationship with them whatsoever.” He stated that under Treasury Board Guidelines, GCSurplus.ca is the official disposal agent for GOC surplus goods. He also stated that the “Canada Revenue Agency has a decentralized organization structure and their Sheriffs may use [A&H].” He suggested that the BBB contact CRA directly as his past attempts to get a definitive answer had been unsuccessful.

[18] Mr. Fabbro was informed by the Bailiff through an email dated October 3, 2013 that the Bailiff had entered into a contract with A&H to sell the gemstones that the Bailiff had seized for CRA.

[19] On October 29, 2013, the BBB emailed Mr. Fabbro and asked about a certificate that A&H had been using to advertise its auctions. In this email, Mr. Fabbro asked BBB if there was anything the BBB could “do to assist in educating the public that Asset Auctions is in no way affiliated with the federal government and that their claims of selling government property are totally false.”

[20] On November 13, 2103, BBB added custom text to the BBB website quoting from the GC Surplus website:

Please note that GCSurplus, “Crown Assets Distribution (CAD), PWGSC, is the only authorized disposal agent for the sale of surplus federal and seized goods.” http:crownassets.pwgsc.gc.ca/mn-eng.cfm.

[21] On July 10, 2014, BBB updated the custom text of its public report on its website to insert a statement that “Asset Auctions does not have a direct relationship with the Canadian government to sell government seized property”.

Analysis

[22] There are two motions before me for orders dismissing this action pursuant to s. 137.1 of the Courts of Justice Act. One motion is brought by the Crown Defendants. The other motion is brought by the BBB. I address each motion in turn.

Motion by Crown Defendants

[23] Subsections 137.1(3) and (4) of the CJA provide:

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

(4) NO DISMISSAL - 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.

[24] Where a party has a burden to satisfy the judge, this means that the party must meet its burden on a balance of probabilities. See 1704604 Ontario Inc. v. Pointes Protection Association, 2020 SCC 22, at para. 23.

Has the Crown shown that that the action arises from an expression made by a person that relates to a matter of public interest?

[25] A&H makes a preliminary submission that s. 137.1 of the CJA is not available to the Crown Defendants. A&H submits that s. 137.1 was not enacted to protect the expression of the federal government or its participation in public debates. A&H submits that s. 2(b) of the Charter guarantees freedom of expression, but does not protect government speech, and that the government is not vulnerable to having its expression chilled by any litigant, whether through strategic or legitimate litigation. Accordingly, A&H submits that the Crown Defendants cannot meet the s. 137.1(3) threshold requirement because s. 137.1 is not available to them.

[26] In Pointes Protection, the Supreme Court of Canada, at paras. 6-7, outlined the legislative background which brought s. 137.1 into effect. The Court referred to the Anti-SLAPP Panel mandated by the Attorney General of Ontario which invited comments and submissions from the public and interested parties and culminated in the Anti-Slapp Advisory Panel: Report to the Attorney General (“APR”) which was published in October 2010.

[27] The APR addressed the appropriate parties to which the proposed scheme would apply. In the APR, the Panel reports, at para. 62:

The Panel is of the view that the proposed scheme should apply to anyone in any civil litigation. The value of public participation is not restricted to the poor or to individuals. The courts have held that commercial speech is entitled to Charter protection. It will be up to the defendant in each case to show that its expressive activity was conducted in respect of a matter of public interest, failing which the special procedure will not be available. It will also be open to the plaintiff to show that it has substantial grounds upon which to proceed with the action.

[28] I take this statement in the APR into consideration when I address A&H’s submission.

[29] Section 137.1 does not provide that its application is unavailable to a government defendant. When I address the words of s. 137.1 in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of this section of the CJA, Act, its object, and the intention of the Ontario legislature, I do not accept A&H’s submission that s. 137.1 is not available to the Crown Defendants. I conclude that section 137.1 of the CJA applies to anyone in civil litigation.

[30] Section 137.1(2) of the CJA provides that “expression” means 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 entity.

[31] In Pointes Protection, at para. 26-27, the Supreme Court of Canada addressed the meaning of “relates to a matter of public interest” and held that these words should be given a broad and liberal interpretation, consistent with the legislative purpose of s 137.1(3). The Court cited Grant v. Torstar Corp., 2009 SCC 61 and held that the expression should be assessed as a whole, and it must be asked whether some segment of the community would have a genuine interest in receiving information on the subject.

[32] The Crown Defendants’ Statements were made in response to queries from members of the public, the media (the CBC), and the BBB. The queries concerned the relationship between Government of Canada entities (the CRA and GC Surplus) and A&H which was conducting public auctions. The subject matter of the expressions was of interest to the questioners and other members of the public.

[33] A&H pleads causes of action in defamation, misfeasance in public office, negligence, and/or unlawful interference with economic relations and claims general damages as well as special damages and punitive damages. A&H acknowledges that the action arises from expressions that relate to a matter of public interest under s. 137.1(3) of the CJA.

[34] I am satisfied that the Crown Defendants have satisfied their burden of showing that the action against the Crown Defendants arises from expressions made by the Crown Defendants that relate to a matter of public interest. from these expressions.

[35] With the Crown Defendants having done so, the burden shifts to A&H to satisfy me that, (a) there are grounds to believe that, (i) the action has substantial merit, and (ii) the Crown Defendants have no valid defence in the action; and (b) the harm likely to be or have been suffered by A&H as a result of the Crown Defendants’ Statements is sufficiently serious that the public interest in permitting the action to continue outweighs the public interest in protecting that expression.

[36] The burden is on A&H to satisfy me of both (a) and (b). If either (a) or (b) is not met, then this will be fatal to A&H discharging its burden and, as a consequence, the action will be dismissed. See Pointes Protection, at para. 33.

Has A&H shown that there are grounds to believe that the action against the Crown Defendants has substantial merit?

[37] In Pointes Protection, the Supreme Court of Canada, at para. 47, held that the words “substantial merit” are animated by a concern that, at a minimum, neither frivolous suits nor suits with only “technical” validity are sufficient to withstand a s. 137.1 motion. The Supreme Court of Canada held, at paras. 49-51, held that for 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 favour of the plaintiff.

[38] In Pointes Protection, the Supreme Court of Canada concluded, at para. 39-40, that “grounds to believe” requires that there be a basis in the record and the law – taking into account the stage of litigation at which a s. 137.1 motion is brought – for finding that the underlying proceeding has substantial merit and that there is no valid defence. This standard requires something more than mere suspicion but less than proof on the balance of probabilities.

[39] The motion judge needs to be satisfied that there is a basis in the record and the law - taking into account the stage of the proceeding - for drawing such a conclusion. The claim must be legally tenable and supported by evidence that is reasonably capable of belief. In light of the existence of a record, the substantial merit standard calls for an assessment of the evidentiary basis for the claim. A claim with merely some chance of success will not be sufficient to prevail, nor will a claim that has been merely nudged over the line of having some chance of success. The substantial merit test is more demanding than the “plain and obvious” standard on a motion to strike out a pleaded claim and less stringent than the “strong prima facie case” threshold which requires a strong likelihood of success or the standard on a motion for summary judgment. See Pointes, at para. 50-51.

Has A&H shown that there are grounds to believe its claim against the Crown Defendants in relation to CRA statements to the CBC has substantial merit?

[40] A plaintiff in a defamation action is required to prove three things to obtain judgment and an award of damages: (1) that the impugned words were defamatory, in the sense that they would tend to lower the plaintiff’s reputation in the eyes of a reasonable person; (2) that the words in fact refer to the plaintiff; and (3) that the words were published, meaning that they were communicated to at least one person other than the plaintiff. See Grant v. Torstar, at para. 28.

[41] In the Amended Amended Statement of Claim at paras. 17-21, A&H pleads the allegations of fact in respect of its claim arising from statements made by the CRA to the CBC:

17. In or around February 2013, CRA’s Media Relations advisor, Mylene Croteau, advised CBC/Radio-Canada in Quebec(“CBC”) as follows:

[TRANSLATION: CRA confirms that there is no contract or arrangement between the CRA and Asset Auctions. Please note that the CRA does not proceed with the seizing or selling of objects. It is bailiffs or sheriffs who execute these actions following the CRA’s directions.]

18. CRA failed to disclose to CBC, however, that it had approved the Auction Agreement, authorized A&H to sell the Gemstones and had an ongoing business relationship with A&H.

19. On February 11, 2013, CBC published an article and posted a video on its website [URL]. In the article, CBC stated:

[TRANSLATION: On their website, the business claims being mandated by the federal government. However, the CRA says that there is no contract or arrangement with Asset Auctions.]

20. In the video, a CBC reporter said:

[TRANSLATION: On its website Asset Auctions is under contract with the federal government, a contract that permits them to resell goods seized by the government. However, the Canadian Revenue Agency claims that there is no contract or arrangement with Asset Options.]

21. The statements described in paragraph 17-20 (“CRA’s Defamatory Statements”) are, in their entirety and in their context (including both the express statements and material omissions), false and defamatory of the Plaintiff. In their natural and ordinary meaning, and by innuendo, the statements meant and were understood to mean:

(a) A&H was not authorized by the CRA to sell the Gemstones;

(b) The Gemstones that A&H was auctioning had not been seized for the CRA; and

(c) A&H engages in deceptive marketing, misleads its customers and is not trustworthy as an auctioneer.

[42] A&H provided evidence from Salim Khan, the Director of Auctions of A&H. Mr. Khan states in his affidavit that since the Agreement, A&H and CRA have been involved in a direct business relationship regarding the gemstones, a relationship that continued including to the date of his affidavit. Mr. Khan appends as an exhibit to his affidavit an email from Robert Hoilett of CRA to Rick Cowie (an employee of the Bailiff) dated August 12, 2009 in which Mr. Hoilett advises that he approves wording for A&H’s auction flyers to include “Seized for Canada Revenue Agency”. Mr. Khan’s evidence is that on September 7, 2010, the CRA asked the Bailiff to be notified in advance of locations where auctions conducted by A&H would be held as well as details surrounding the advertising of auctions and that there was email correspondence between A&H and CRA about auctions to be held by A&H.

[43] In his affidavit, Mr. Khan expresses surprise that CRA wrote to the Bailiff asking A&H to cease any advertising that references CRA or the GOC relating to seizure of gemstones. Mr. Khan gives evidence that the Department of Canadian Heritage authorized A&H to use the Canadian flag in advertisements for its auctions. Mr. Khan’s evidence is that A&H provided notices to CRA of scheduled auctions in Canada on at least 44 occasions and that it provided regular reports on the sales of gemstones and made remittances to CRA by cheques payable to the Receiver General of Canada and delivered to CRA at its Toronto West offices. Mr. Khan’s evidence is that at CRA’s request, A&H provided inventory reports on the gemstones in its possession and the gemstones set in jewellery.

[44] A&H relies on evidence that by February 11, 2013, when CRA made statements to the CBC that there is no arrangement between CRA and A&H, A&H had held 321 auctions to sell the gemstones seized for CRA and had been reporting sales, making remittances, and providing notices of auctions to CRA for more than 3 ½ years. A&H relies on evidence from Kimberley Hudson, a representative of CRA, that the statements made by CRA to the CBC were deliberately vague - but as factually correct as they could be - so as to distance CRA from A&H.

[45] A&H relies on an internal CRA Fact Sheet dated September 21, 2010 that records the history of the involvement of A&H with the Gemstones and states, among other things, that on September 15, 2010, CRA officers and a representative of the Bailiff met with A&H to discuss advertising and a sales schedule with respect to the remaining gemstones and that A&H agreed to provide CRA with its weekly auction schedules and a status report on the inventory of the Gemstones. The Fact Sheet states:

The gemstones were seized by the Bailiff Asset Recovery Inc. on CRA’s behalf. The Bailiff liquidated some of the gemstones then contracted Asset Auctions Inc. to liquidate the remaining stones. There is no contract between CRA and Asset Auctions Inc.

[46] A&H submits that the statement by CRA to CBC that it has no arrangement with A&H was false and defamatory. A&H submits that the context of the statement made by the CRA to the CBC is that it was in response to questions from a reporter suggesting the A&H was engaged in false advertising in respect of seized government property. A&H submits that in this context, the main thrust of CRA’s statement to the CBC was as pleaded, that A&H was not authorized to sell the gemstones, that the gemstones that A&H was auctioning had not been seized for CRA, and that A&H engages in deceptive marketing, misleads its customers, and is not trustworthy as an auctioneer.

[47] The Crown Defendants provided evidence on this motion from Kimberley Hudson, an Acting Strategic Program Advisor with the Collection Enforcement Division Headquarters of the CRA.

[48] In her affidavit, Ms. Hudson explains that a reporter from the CBC contacted the CRA’s Public Affairs Branch (“PAB”) on February 11, 2013 with questions about A&H and, specifically, whether CRA has a link with A&H. Ms. Hudson states that she received an email from Sonia Abbott, an Issues Manager from the Assistant Commissioner’s Office of the CRA’s Taxpayer Services & Debt Management Branch sending the inquiry from the CBC and a proposed response and asking Ms. Hudson to obtain approval of the response. The English translation of the response sent to the CBC reads:

The CRA confirms that there is no contract or arrangement between the CRA and Asset Auctions. Please note that the CRA does not seize or sell property. Bailiffs or sheriffs carry out these actions, following the CRA’s instructions.

[49] Ms. Hudson’s evidence is that after receiving the CRA’s response, the reporter for the CBC contacted PAB with some follow-up questions. Ms. Abbott sent an email that describes these questions:

The reporter called back with follow-up questions, basically just asking us to confirm that we have no relationship, asking us why they are saying they are selling merchandise seized by the government.

Media Relations reiterated our response in the same terms (below). However, the reporter is pushing and asking about the procedures, pushing that if we instruct the bailiffs and sheriffs to seize assets, then we are linked to what they do afterwards. So, the reporter is asking us for details about the process.

[50] Ms. Hudson followed up with the Director of the Accounts Receivable Directorate of the CRA and obtained approval to send the following additional response to the CBC:

The CRA confirms that there is no contract or arrangement between the CRA and Asset Auctions.

Generally speaking, to protect the Crown’s interests, the CRA may in certain cases take legal action such as seizing property. The CRA is authorized to do so by provincial and federal legislation, including the Income Tax Act and the Excise Tax Act.

Please note that the CRA does not seize or sell property. Bailiffs or sheriffs take full responsibility for disposing of seized property. They dispose of such property in accordance with the applicable law and remit the proceeds to the CRA ...

[51] The Crown Defendants submit that the CRA statements to the CBC were not defamatory. They submit that CRA’s statements to the CBC described the lack of any formal relationship between A&H and the GOC and that this statement was substantially true. They submit that the statements to the CBC do not suggest that A&H engages in deceptive marketing, misleads its customers, and is not trustworthy as an auctioneer. The Crown Defendants submits that these statements would not lower the reputation of A&H in the eyes of a reasonable person.

[52] There is no question that CRA did not have a contract with A&H. This is not in dispute. The question is whether A&H has satisfied me that there are grounds to believe that CRA’s statement to CBC that there is no arrangement with A&H is one that, in the context in which the statement was made, gives rise to a claim that has substantial merit.

[53] The first sentence in the CRA’s statement to the CBC is that there is no contract or arrangement between the CRA and A&H. This must be read with the next two sentences in which CRA states that it does not proceed with the seizing or selling of objects, and it is bailiffs or sheriffs who execute these actions following CRA’s directions.

[54] The CRA’s follow-up statement was made in response to a statement from the reporter for the CBC that A&H mentions on its website that it sells goods for the government and, if CRA instructs bailiffs or sheriffs, it must be “linked” to what they do. In response, the CRA repeated that it does not, itself, seize or sell property, and that bailiffs or sheriffs take responsibility for disposing of seized property, following CRA’s instructions. These statements, fairly read, communicate that a bailiff or sheriff appointed by CRA to seize and dispose of property, such as the gemstones, may have contractual or other arrangements with others, such as A&H, and that where a bailiff or sheriff uses a third party such as A&H to dispose of seized property, the CRA gives instructions to the bailiff or sheriff with respect to disposition of seized property by the third party.

[55] The main thrust of the statement that there is no contract or arrangement between the CRA and A&H must be understood in this context.

[56] When I consider the statements made by CRA to CBC in this context, I am not satisfied that there is a basis in the record for me to find that the main thrust of the statements is that A&H was not authorized by a bailiff or sheriff (appointed by CRA) to sell the gemstones, that the gemstones that A&H was auctioning had not been seized by a bailiff or sheriff for CRA, or that A&H engages in deceptive marketing, misleads its customers, and is not trustworthy as an auctioneer.

[57] A&H pleads that CRA authorized CBC to publish CRA’s defamatory statements, and that CBC’s published statements are publication, repetition, and re-publication by CBC of CRA’s defamatory statements. I do not agree that the CBC repeated or republished the statements made by CRA to CBC. The CBC’s published statements do not refer to CRA’s statements that it does not, itself, seize or sell property and that bailiffs or sheriffs carry out these actions, following the CRA’s instructions. This is crucial context that was expressly included in CRA’s statements to the CBC, and it is missing from the CBC’s published statements.

[58] I am not satisfied that A&H has shown that there is a basis in the record for me to find that the words used by CRA in its statements to CBC were defamatory, in the sense that they would tend to lower the reputation of A&H in the eyes of a reasonable person. The prospect of success of A&H’s claim in respect of the statements made by CRA to the CBC does not weigh in favour of A&H.

[59] I am not satisfied that there are grounds to believe that A&H’s claim against the Crown Defendants in relation to statements made by CRA to the CBC has substantial merit.

Has A&H shown that there are grounds to believe that its claim in relation to published statements by PWGSC and Michael Fabbro has substantial merit?

[60] In its Amended Amended Statement of Claim, A&H pleads the following allegations in respect of alleged misconduct by PWGSC, Mr. Fabbro, and BBB [I have omitted underlining showing amendments]:

25. PWGSC (including its branch, GC Surplus) has taken steps to actively thwart A&H’s attempts to sell the Gemstones and damage A&H’s reputation. Particulars of this misconduct include:

(a) from 2010 to 2015, representatives of PWGSC (including, the Defendants, Mike Fabbro) (“Fabbro”), Senior Business Development Manager of GC Surplus) participated in, encouraged, assisted and/or orchestrated efforts to disrupt A&H auctions by, among other things,

(i) attending such auctions and shouting and otherwise advising potential customers that A&H is not authorized by the Government of Canada to sell government seized assets; and

(ii) distributing flyers at such actions (sic) containing statements that potential buyers have been defrauded by A&H and that A&H is not authorized by the Government of Canada to sell government seized assets;

(b) falsely advising A&H customers in writing and verbally during the period from late 2013 to November 2015 that the Government of Canada “is in no way affiliated” with A&H, GC Surplus is the only entity authorized to sell government seized assets and they had been defrauded by A&H; and

(c) continually and falsely advising BBB since at least July 2014, including as described in paragraphs 27 and 32 below, that PWGSC is the only authorized agent for the sale of surplus federal and seized goods, and that A&H is not authorized by the CRA to sell such goods (collectively, “PWGSC’s Defamatory Statements”).

26. Since 2012, BBB has continually published reports on A&H on its website containing numerous false statements that A&H is not authorized from the Government of Canada to sell seized goods (“BBB’s Defamatory Statements”), including the following alert (“Alert”), which A&H believes was posted by BBB in or around early July 2014:

! There is an alert for this business!

Please note that we have been advised by GC Surplus, “Crown Assets Distribution (CAD) of PWGSC, they are the only authorized disposal agent for the sale of surplus federal and seize goods. “http://crownassets.pwgsc.gc.ca/mn-eng.cfm.

Consumers have also advised our office that they believe A&H Asset Auctions was selling government seized jewels on behalf of the Government of Canada however, A&H Asset Auctions does not have a direct relationship with the Canadian Government to sell government seized property ...

27. A&H pleads that PWGSC and Fabbro provided BBB with the false advice that was the basis for the Alert. BBB assigned A&H its lowest rating of “F” based on the false information it had received from PWGSC and Fabbro.

28. BBB is not protected by qualified privilege as, among other things, it published its defamatory statements with reckless disregard as to their truth after it received written confirmation from Bailiff in July 2014 that Bailiff had, as CRA’s agent, contracted A&H to sell the Gemstones that had been seized for the CRA. On July 28, 2014, BBB responded to Bailiff’s confirmation by stating that it had been advised that it is not lawful for A&H to claim to sell government seized property. A&H pleads that it was PWGSC and Fabbro who provided this false advice to BBB in or around July 2014.

29. These defamatory statements published by PWGSC and BBB are, in their entirety and in their context (including both the express statements and material omissions), false and defamatory of the Plaintiff. In their natural and ordinary meaning, and by innuendo, these defamatory statements are meant and were understood to mean:

(a) A&H was not authorized by the CRA to sell the Gemstones;

(b) the Gemstones that A&H was auctioning had not been seized for the CRA; and

(c) A&H engages in deceptive marketing, misleads its customers and is not trustworthy as an auctioneer.

[61] With respect to the allegations in paragraph 25(a), Mr. Fabbro has provided evidence that he did not attend any A&H auctions. There is no evidence in the record of any other representatives of PWGSC doing what is alleged in paragraph 25(a).

[62] It is a requirement of a defamation claim that the words complained of must be identified, together with their alleged defamatory meaning and any alleged innuendo arising from them. The prohibition against amending the claim once the motion is commenced arises from the strict pleading requirements of a defamation claim. See Thatcher-Craig v. Clearview (Township), 2023 ONCA 96, at para. 52.

[63] A&H does not identify in its pleading:

a. any particular statements made by PWGSC or Mr. Fabbro to customers of A&H during the period from late 2013 to November 2015 that the Government of Canada “is in no way affiliated” with A&H.

b. any particular statements made by PWGSC (or GC Surplus) that A&H is not authorized to sell government goods.

c. any particular statement made by or at the direction of Mr. Fabbro to BBB from June 2014 to early 2016 of advice that was the basis for BBB’s alert on its web site.

d. any particular statement made by Mr. Fabbro and PWGSC to BBB that it was unlawful for A&H to claim that it was selling government property.

[64] With respect to A&H’s pleaded allegations in relation to statements made by Mr. Fabbro and PWGSC, A&H submits in its factum that the statements that are pleaded were published to BBB on October 29, 2013. This is a reference to an email described in Mr. Fabbro’s affidavit that was sent by Mr. Fabbro to Shaye Harris of BBB in response to a question about a certificate that A&H was allegedly giving to its customers. Mr. Fabbro responded that “this is a false certificate” and “all federal symbols are used without permission”. Mr. Fabbro asked for Ms. Harris’ assistance in educating the public that A&H “is in no way affiliated with the federal government and that their claims of selling government property are totally false”.

[65] The Crown Defendants submit that A&H is impermissibly relying on evidence of statements made in the October 29, 2013 email because A&H did not plead the words complained of in this email as a defamatory statement made by Mr. Fabbro or PWGSC to BBB, as it was required to do. The Crown Defendants submit that A&H is prohibited from looking past the allegations of statements made by Mr. Fabbro and PWGSC in its pleading by relying on this motion on the October 29, 2013 email.

[66] Section 137.1(6) of the CJA provides that “[u]nless a judge orders otherwise, the responding party shall not be permitted to amend his or her pleadings in the proceeding, (a) in order to prevent or avoid an order under this section dismissing the proceeding; or (b) if the proceeding is dismissed under this section, in order to continue the proceeding”.

[67] In Clearview, in response to an action for defamation, negligence and breach of fiduciary duty based on letters from Township residents that the Township published on its website, the Township moved to have the action dismissed under s. 137.1 of the CJA. The motion was substantially dismissed. The statement of claim did not specifically identify the defamatory words complained of but alleged that the overwhelming majority of public comments were negative and some were defamatory, inaccurate and damaging. The motion judge had based his analysis on the whole record before him rather than just the statement of claim. The Court of Appeal, at paras. 51-53, held that the motion judge had erred in so doing:

... While it is within the discretion of a motion or trial judge to control the court process and in that context grant latitude to a self represented litigant on procedural issues, that discretion does not extend to rectifying substantial legal deficiencies: [citation omitted].

It is a requirement of a defamation claim that the words complained that must be identified, together with their alleged defamatory meaning and any alleged innuendo arising from them: [citations omitted] ... The prohibition against amending the claim once the motion is commenced arises from the strict pleading requirements of a defamation claim.

The effect of what the motion judge did by looking past the actual statement of claim to the allegations more fully set out in the factum on the motion was to circumvent the prohibition in s. 137.1(6) and allow the respondents to effectively amend their claim. The claim therefore included not only the arsenic allegation that was specifically pleaded, but the other negative comments about the respondents that were listed in their factum on the motion, set out above at para. 18.

[68] Although A&H pleads that PWGSC and GC Surplus falsely advised A&H customers in writing and verbally during the period from late 2013 to November 2015 that the Government of Canada “is in no way affiliated” with A&H, A&H did not provide evidence of such statements to A&H customers in response to this motion. The October 29, 2013 email from Mr. Fabbro to Ms. Harris uses the words “is in no way affiliated” in relation to A&H and the federal government, but it is a communication to BBB and not to A&H customers. As I have noted, this email to BBB was not identified as a defamatory statement in the A&H’s pleading.

[69] I do not consider the October 29, 2013 email as evidence supporting A&H’s submission that its claim against the Crown Defendants in relation to statements made by Mr. Fabbro has substantial merit. To do so would effectively allow A&H to amend its statement of claim through a submission made in its factum, something that is prohibited by s. 137.1(6) of the CJA.

[70] I go on, nevertheless, to consider the October 29, 2013 email as if it qualifies as proper evidence supporting A&H’s submission that its claims in relation to statements made by Mr. Fabbro in this email have substantial merit.

[71] The October 29, 2013 email includes a statement that A&H “is in no way affiliated with the federal government”. A&H is not affiliated with the federal government in the sense of being a branch or subsidiary part of the federal government. Even giving the word “affiliated” a broader meaning of having a connection through a reciprocal business relationship, I am not satisfied that there is a basis in the record and at law for a finding that the thrust of Mr. Fabbro’s statement that A&H “is in no way affiliated” with the federal government is substantially untrue. I say this because the fact that the Bailiff contracted with A&H to sell the gemstones seized by the Bailiff for the CRA (without the prior approval or authorization by the CRA), even having regard to the communications involving CRA and A&H as described in Mr. Khan’s affidavit, does not make the statement that A&H is not affiliated with the federal government, in the sense of not having a connection through a reciprocal business relationship, substantially untrue.

[72] I am, however, satisfied that there are grounds to believe that Mr. Fabbro’s statement to BBB in the October 29, 2013 email that A&H’s “claims of selling government property are totally false” is untrue. The Alert published by BBB on November 13, 2013 does not repeat this statement made by Mr. Fabbro which, on the evidence, was not repeated to the public by BBB and stayed with BBB and its employee, Ms. Harris. With this limited publication, if the statement in the October 29, 2013 email that A&H’s “claims of selling government property are totally false” had been pleaded as an alleged defamatory statement, there is a basis in the record for a finding that a claim for defamation in relation to this statement has technical merit. However, given the limited publication of this statement, there is not a basis in the record for a finding that A&H’s reputation with the public, beyond BBB, was harmed by this statement. A&H’s defamation claim based on this statement, if it had been pleaded, while perhaps having technical validity, would not be one that has substantial merit within the meaning of this term in s. 137.1(4)(a)(i) of the CJA, as explained in Pointes Protection.

[73] A&H submits that PWGSC and Mr. Fabbro are liable for the publication of the Alert text by BBB. In support of this submission, A&H cites Platnick, at para. 152, where the Supreme Court of Canada held that a defendant can be liable for each republication of the initial publication in at least three situations: (i) if the defendant has authorized the republication; (ii) if the republication is the “natural and probable consequence” of the defendant’s initial publication; and (iii) if the republication was foreseen or reasonably foreseeable by the defendant.

[74] Fiona Dunbar, BBB’s Director of Consumer Services, deposed in her affidavit that with respect to the “Alert” text published on July 8, 2014, the statement that Crown Assets Distribution is the only authorized disposal agent for the sale of surplus federal and seized goods is a factually correct statement that was taken from an official government website and correctly attributed to GC Surplus. The Crown Defendants rely on the Surplus Crown Assets Act to support this submission.

[75] A&H has not pleaded the words of a particular statement made by the PWGSC or Mr. Fabbro to BBB. A&H relies on evidence of the October 29, 2013 email from Mr. Fabbro to Ms. Shaye of the BBB, but the BBB did not republish the words used by Mr. Fabbro in this email in the Alert text.

[76] For these reasons, I am not satisfied that A&H has shown that there are grounds to believe that its claims against the Crown Defendants in relation to statements pleaded as having been made by PWGSC (including GC Surplus) and Mr. Fabbro have substantial merit.

Has A&H shown that there are grounds to believe that the Crown Defendants have no valid defence in the action?

[77] Under s. 137.1(4)(a)(ii) of the CJA, a judge shall not dismiss a proceeding under subsection (3) if the responding party satisfies the judge that there are grounds to believe that the moving party has no valid defence in the proceeding.

[78] In Pointes Protection, the Supreme Court of Canada addressed this provision of the CJA and held that once the moving party has put a defence in play, the onus is back on the responding party to demonstrate that there are grounds to believe that there is no valid defence. If there is any defence that is valid, then the responding party has not met its burden and the underlying claim should be dismissed. The motion judge must make a determination of validity on a limited record at an early stage in the litigation process and, accordingly, this context should be taken into account in assessing whether a defence is valid. The assessments of whether a claim has “substantial merit” and whether the moving party “has no valid defence” should be seen as constituent parts of an overall assessment of the prospect of success of the underlying claim. See Pointes Protection, at paras. 57-60.

The defence of justification

[79] Once a prima facie showing of defamation has been made, the words complained of are presumed to be false. To succeed on the defence of justification, a defendant must adduce evidence showing that the statement was substantially true. The burden on the defendant is to prove the substantial truth of the “sting”, or main thrust, the defamation. The defence of justification will fail if the publication in issue is shown to have contained only accurate facts but the sting of the libel is not shown to be true. See Bent v. Platnick, 2020 SCC 23, at para. 107.

[80] I first address the statements made by CRA to the CBC on February 11, 2013.

[81] A&H pleads that the sting of these statements is:

a. A&H was not authorized by CRA to sell the gemstones;

b. The gemstones that A&H was auctioning had not been seized for the CRA; and

c. A&H engages in deceptive marketing, misleads its customers and is not trustworthy as an auctioneer.

[82] A&H submits that the statement that there is no contract or arrangement between CRA and A&H was false because, even if it were true that there was no contract, the evidence favours A&H’s assertion that it had an arrangement or business relationship with CRA since June 2009. A&H submits that the main thrust, or sting, of CRA’s statement, that A&H was scamming the public in promoting the sale of gemstones seized for CRA, was false.

[83] A&H provided evidence that CRA received sales reports and remittances from A&H at the direction of the bailiff, was given advance notices of public auctions conducted by A&H, received updates at its request on remaining inventory held by A&H, and provided remittances directly to CRA.

[84] CRA submits that the evidence shows that it did not enter into an arrangement with A&H, in the sense of a non-contractual reciprocal or collaborative relationship and that CRA’s statement to CBC is substantially true.

[85] As I have noted, CRA’s statements to CBC that there is no contract or arrangement between CRA and A&H must be understood in the context of the full statements, where CRA expressly states that CRA does not seize or sell property and that bailiffs or sheriffs carry out these actions, following CRA’s instructions. CRA does not say that the bailiff or sheriff did not enter into an agreement or arrangement with A&H. The follow-up question from the CBC reporter to CRA on February 11, 2013, after the first statement was sent, suggesting to the CRA representative that CRA is “linked” to what the bailiff or sheriff does afterwards, shows that the CBC reporter understood that CRA did not express that A&H did not have a contract with a bailiff or sheriff to sell the gemstones. In this context, I am not satisfied that there is a basis in the record to believe that the main thrust of CRA’s statements to the CBC is, as A&H contends, that A&H was scamming the public in promoting the sale of gemstones seized for CRA.

[86] A&H has failed to satisfy me that there are grounds to believe that the Crown Defendants have no valid defence of justification to A&H’s claims in relation to statements made by CRA to the CBC.

[87] I turn to the defence of justification as it relates to A&H’s claims based on statements made by Mr. Fabbro to the BBB.

[88] As I have noted, A&H pleads that Mr. Fabbro falsely advised A&H customers in writing and verbally during the period from late 2013 to November 2015 that the Government of Canada “is in no way affiliated” with A&H, GC Surplus is the only entity authorized to sell government seized assets, and they had been defrauded by A&H.

[89] A&H submits that there is a basis in the evidence for me to believe that Mr. Fabbro and PWGSC cannot establish the substantial truth of the statements to BBB because they knew they were false. A&H submits that the sting of the statement (that A&H is defrauding the public in auctioning gemstones seized for CRA) is false.

[90] The Crown Defendants submit that the October 29, 2013 email from Mr. Fabbro to BBB is the only evidence of such a statement by Mr. Fabbro, and it was not republished by BBB. The Crown Defendants submit that A&H has failed to show that there are grounds to believe that the statement that the Government of Canada is not affiliated with A&H is substantially untrue. In support of this submission, the Crown Defendants point to evidence that in correspondence with the BBB on September 3, 2011, in response to a complaint, a representative of A&H wrote: “We are a private company not affiliated with the Government”.

[91] A&H has failed to satisfy me that there are grounds to believe that Mr. Fabbro’s statement that A&H “is in no way affiliated with the federal government” is substantially untrue. With respect to this statement, A&H has failed to satisfy me that there are grounds to believe that the Crown Defendants have no defence of justification.

[92] This statement must, however, be understood in the context of the accompanying statement made in Mr. Fabbro’s email that “their claims of selling government property are totally false”. When the October 29, 2013 email is read as a whole, the thrust is that A&H is not authorized to sell the gemstones as government property, and that it is falsely misleading the public in so doing.

[93] If A&H had pleaded a claim against the Crown Defendants based on the October 29, 2013 email, and if I had concluded that such a claim had substantial merit, I would be satisfied that there are grounds to believe that the Crown Defendants have no valid defence of justification for the statement that A&H made to BBB that A&H’s “claims of selling government property are totally false”.

The defence of qualified privilege and the defence of responsible communication

[94] The Crown Defendants plead and rely on the defences of qualified privilege and responsible communication.

[95] An occasion of qualified privilege arises where the person makes a communication and has an interest or duty to make it to the person to whom it is made, and that person has a corresponding interest or duty to receive the communication. Qualified privilege attaches to the occasion, and not the communication itself.

[96] The defence of responsible communication has two essential elements: public interest and responsibility. The defendants must show that the publication is on a matter of public interest and that the publication was responsible, and that the defendant was diligent in trying to verify the allegations, having regard to all the relevant circumstances. See Grant v. Torstar Corp., 2009 SCC 61, at para. 98. Where a trier could reasonably conclude that the defendants did not conduct a diligent investigation to verify the allegations, a trier could reasonably conclude that the defence of responsible communication would not succeed. See Subway Franchise Systems of Canada Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 26, at para. 57.

[97] A&H does not contend that the statement made by CRA to the CBC was not made on an occasion of qualified privilege.

[98] A defence of qualified privilege can be defeated where the dominant motive for publishing this statement is malice or where the limits of the duty have been exceeded. A&H submits that there is a basis in the record and the law for a finding that the Crown Defendants’ dominant motive for making the alleged defamatory statements was malice and, therefore, there are grounds to believe that the defence of qualified privilege is defeated.

[99] A&H also relies on malice as the basis for its submission that the Crown Defendants cannot be said to have diligently investigated the truth of the alleged defamatory statements and, therefore, there are grounds to believe that this defence is not valid.

[100] Malice includes any ulterior motive that conflicts with the mutual interest created by the occasion. It may also be established by showing that the defendant spoke dishonestly or with reckless disregard for, or indifference to, the truth. See Botiuk v. Toronto Free Press Publications Ltd., 1995 CanLII 60, at para. 79; Hill v. Church of Scientology of Toronto, 1995 CanLII 59 (SCC), at para. 145; Plotnick, at para. 136.

[101] A general plea of malice is not sufficient. The material facts upon which a party relies in support of a plea of malice must be set out: Bird v. Ontario, 2014 ONSC 2457, at para. 50; Miguna v. Toronto Police Services Board, 2008 ONCA 799, at para. 27; Tibbles v. Gloster, 2019 ONSC, at para. 100.

[102] The Crown Defendants submit that A&H has not pleaded any particulars of material facts in the Amended Amended Statement of Claim to support a pleading of malice. A&H did not deliver a reply pleading.

[103] A&H pleads in paragraph 15 of its Amended Amended Statement of Claim that the Crown Defendants knew or ought to have known that (a) CRA authorized the Bailiff to enter into the Agreement with A&H, (b) CRA authorized A&H to sell the gemstones; and (c) the gemstones were seized for the CRA. A&H pleads in paragraph 16 that since June 2009, the Defendants have repeatedly taken steps to publicly discredit and disparage A&H’s reputation, thereby impairing A&H business as an auctioneer in general and its ability to sell the gemstones at fair retail market value specifically. A&H submits that these are sufficient pleadings of material facts to support a plea of malice.

[104] I disagree that A&H has pleaded material facts that, if true, would support a finding of express malice that would defeat a defence of qualified privilege. A&H’s pleadings in its Amended Amended Statement of Claim are sufficient as pleadings that the Crown Defendants published defamatory statements. However, the malice which normally arises from the publication of defamatory words and which can be rebutted by qualified privilege is different from the “express” or “actual” malice which must be proved by a party seeking to defeat a qualified privilege defence. See Tibbles, at para. 99, citing Taylor v. Despard, 1956 CanLII 124 (ON CA), [1956] O.R. 963 (C.A.).

[105] In Taylor, the Court of Appeal held that evidence of express malice to defeat a defence of qualified privilege may be intrinsic or extrinsic. Extrinsic evidence consists of evidence apart from the statements themselves that tends to show that in publishing the statements, the defendant was actuated by motive of personal ill-will or some other improper motive in contrast to a motive inspired by a sense of duty or the mutual interest which the occasion created. Intrinsic evidence is that evidence which the words themselves provide.

[106] The words of the alleged defamatory statements, themselves, are not evidence of express or actual malice that would defeat a defence of qualified privilege. I conclude that A&H has failed to plead particulars of facts that, if proven, would support a finding that the words used by the Crown Defendants were actuated by express malice.

[107] I go on, nevertheless, to address the evidence upon which A&H relies in support of its submission that it has shown that there are grounds to believe that the Crown Defendants acted with actual malice such that there is no valid defence of qualified privilege or responsible communication.

[108] A&H relies on Ms. Hudson’s evidence that the CRA was deliberately vague in making the statements so as to distance CRA from A&H. A&H submits that this evidence disclosed an ulterior motive of not wanting to be associated with A&H, and shows malice because the ulterior motive conflicts with the mutual interest created by the occasion. Ms. Hudson qualified her evidence that she was intentionally vague in her statements to distance the CRA from A&H by adding that she and other representatives of CRA were as factually correct as they could be.

[109] In Horrocks v. Lowe, [1975] A.C. 135, Lord Diplock wrote:

Qualified privilege would be illusory, and the public interest that it is meant to serve defeated, if the protection which it affords were lost merely because a person, although acting in compliance with a duty or in protection of a legitimate interest, disliked the person whom he defamed or was indignant at what he believed to be that person’s conduct and welcomed the opportunity of exposing it. It is only where his desire to comply with the relevant duty or to protect the relevant interest plays no significant part in his motives for publishing what he believes to be true that “express malice” can properly be found.

[110] This statement by Lord Diplock was cited with approval by the Supreme Court of Canada in Davies & Davies v. Kott, 1979 CanLII 42 (SCC), [1979] 2 S.C.R. 686, at para. 25.

[111] When I apply this standard for what, in law, amounts to express malice, I am not satisfied that Ms. Hudson’s evidence about intending to be vague is a basis in the record or at law, based on the standard described in Pointes Protection, for a finding that Ms. Hudson made statements with an ulterior motive that conflicts with the mutual interest created by the occasion of qualified privilege, or knowing they were false or with reckless indifference to whether they were true or false, or that her dominant motive was to harm A&H.

[112] A&H submits that there is a basis in the record that Mr. Fabbro and PWGSC made their statements knowing they were false and that PWGSC had the ulterior motive of persuading CRA to use GC Surplus as its default disposal agent or exclusive selling agent. In support of this submission, A&H cites evidence of an email from Robb Flemming of GC Surplus to Mr. Fabbro dated October 4, 2013 in which he writes: “Just a thought, but if the CRA business model is to use bailiffs for seizure, they could easily instruct them to exclusively use GCSurplus as the selling agent”.

[113] The casual statement made by Mr. Flemming in his email, to which Mr. Fabbro did not respond, does not provide grounds to believe that PWGSC acted with an ulterior motive that conflicted with the mutual interest created by the occasion of qualified privilege so as to defeat this defence by a finding of malice.

[114] When he was cross-examined, Mr. Fabbro agreed that he knew by October 7, 2013 that A&H had a contract with the Bailiff to liquidate the gemstones. He testified that when he wrote the October 29, 2013 email, he believed his statement to BBB that A&H “is in no way affiliated” with the federal government was true. Mr. Fabbro’s evidence was that when he received this information, it was four years after the Bailiff’s contract with A&H and his perception at the time was that the Bailiff’s contract with A&H was “a one-and-done” and all over with, and that the words of his email reflected his best knowledge at the time.

[115] I have held that there is a basis in the record for a finding that Mr. Fabbro’s statement in the same email that A&H’s “claims of selling government property are totally false” is untrue. If I had held that A&H’s claim against the Crown Defendants based on the October 13, 2013 email from Mr. Fabbro to BBB has substantial merit, I would also be satisfied that there are grounds in the record to believe that Mr. Fabbro’s email was sent with reckless disregard for the truth as to whether A&H’s claims of selling government property are “totally false”, and that this statement thereby qualifies as one made with malice.

[116] Subject to this qualification, I am not satisfied that there are grounds to believe that the alleged defamatory statements made by the Crown Defendants were actuated by malice which defeats the defence of qualified privilege or responsible communication.

A&H’s claim in relation to statements allegedly made by CRA to Ahmad Alakoozi

[117] In addition to A&H’s claims in respect of CRA’s statements to CBC and its claims in respect of Mr. Fabbro’s and PWGSC’s statements to BBB, the Crown Defendants move in relation to a claim made by A&H based on an allegation that Ahmad Alakoozi purchased jewellery from an A&H auction and, when requesting a refund, allegedly told A&H that CRA said to him that they had no contract with A&H and have nothing to do with A&H.

[118] No evidence was provided from Ahmad Alakoozi on this motion.

[119] A&H does not address this claim in its factum.

[120] I am satisfied that A&H’s claim against the Crown Defendants in relation to statements allegedly made by CRA to Mr. Alakoozi arises from an expression made by the CRA that relates to a matter of public interest. I am not satisfied that there are grounds to believe that A&H’s claim in relation to such statements has substantial merit or that the Crown Defendants have no valid defence to the action insofar as it is based on these alleged statements.

Has A&H shown that there are grounds to believe that the harm likely to have been suffered by it as a result of the Crown Defendants’ expressions is sufficiently serious that the public interest in permitting the action to continue outweighs the public interest in protecting that expression?

[121] Section 137.1(4)(b) requires the responding party to satisfy the judge that the harm likely to be 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. The responding party must discharge its burden of proof on a balance of probabilities.

[122] Either monetary harm or non-monetary harm can be relevant to determining where the balance lies. Harm is not synonymous with the damages alleged. There is no threshold requirement for the harm to be sufficiently worthy of consideration. The magnitude of the harm becomes relevant when the motion judge must determine whether it is “sufficiently serious” that the public interest in permitting the proceeding to continue outweighs the public interest in protecting the expression. In other words, the magnitude of the harm simply adds weight to one side of the weighing exercise. See Pointes Protection, at paras. 69-70.

[123] The plaintiff need not prove harm or causation, but must simply provide evidence for the motion judge to draw an inference of likelihood in respect of the existence of the harm and the relevant causal link.

[124] Once the harm has been established and shown to be causally related to the expression, section 137.1(4)(b) requires that the harm and corresponding public interest in permitting the proceeding to continue be weighed against the public interest in protecting the expression. Under section 137.1(4)(b), the legislature expressly makes the public interest relevant to specific goals: permitting the proceeding to continue and protecting the impugned expression. Therefore, not just any matter of public interest will be relevant. Instead, the quality of the expression, and the motivation behind it, are relevant to the analysis. See Pointes Protection, at paras. 73-74.

[125] In Hansman v. Neufeld, 2023 SCC 14, the Supreme Court of Canada held that although general damages are presumed in defamation law, the weighing exercise requires that the harm to the plaintiff be serious enough to outweigh the public interest in protecting the defendant’s expression. While the presumption of damages can establish the existence of harm, it cannot establish that the harm is serious. To succeed on the weighing exercise, a plaintiff must provide evidence that enables the judge “to draw an inference of likelihood” of harm of a magnitude sufficient to outweigh the public interest in protecting the defendant’s expression. Presumed general damages are insufficient for this purpose, as are bare assertions of harm. See Hansman, at para. 67.

[126] In Hansman, the Court held, at para. 68, that even where the extent of harm suffered by the plaintiff is serious, the legislation requires some evidence that enables the judge to infer a causal link between the defendant’s expression and the harm suffered. Where the defendant is not the only one speaking out against the plaintiff, inferring a causal link between the defendant’s expression and the harm suffered by the plaintiff becomes both more important and more difficult. See also Pointes Protection, at para. 72.

[127] A&H relies on expert evidence from Vimal Kotecha, a partner of Richter Inc. and an expert in the valuation of damages, to quantify the damages, if any, that A&H suffered as a result of false statements published by the defendants since February 2013. Mr. Kotecha assumed that the damages period ended in December 2019 because of the impact of the pandemic restrictions in 2020 on A&H’s business (even if the defamatory statements adversely impacted A&H’s ability to continue operating after the pandemic restrictions were lifted). Mr. Kotecha noted the significant decline in the annual revenues of A&H since 2013, observing that A&H had average revenues of over $6.2 million in the three-year period from 2010 to 2012 which declined in the years after that to just over $425,000 in 2016 and 2017. While revenues increased in 2018 and 2019, they never reached the levels of the 2010-2012 period.

[128] Mr. Kotecha concluded that A&H had suffered a loss of profit during the damages period of approximately $2,705,000. He calculated the loss of profit by comparing the profits that A&H would have earned “but for” the defamatory statements and comparing this calculated profit with actual profits, with the difference resulting in loss of profit. The “but for” profit was based on average annual revenues in 2010-2012 of $6,232,657, as adjusted annually for inflation, expected contribution margin (revenue less the direct costs incurred for those revenues) and normalized fixed costs. Cancelled sales of approximately $362,000 were included in the loss of profit calculation.

[129] The Crown Defendants submit that (i) the evidence of harm upon which A&H relies is insufficient to demonstrate that it suffered the harm alleged, and (ii) the evidence is insufficient to establish that A&H suffered any harm that was caused by the Crown Defendants’ expressions. The Crown Defendants submit that, therefore, the public interest in permitting the action to continue is low. The Crown Defendants submit that A&H’s evidence is insufficient to establish that the public interest in permitting the action to proceed outweighs the public interest in protecting the Crown Defendants’ expressions.

[130] In his report, Mr. Kotecha states the factual assumptions he was instructed to rely on for his report. One of these assumptions is that “[a]s a result of the actions taken by Radio-Canada and BBB, A&H suffered loss of profits, cancelled sales and incurred costs as a direct result of the Defamation. The term “Defamation” is defined to mean “the false statements published by the Defendants that CRA has no relationship or arrangement with A&H regarding the Gemstones and that A&H does not have a relationship with the Government of Canada to sell seized assets including the Gemstones”.

[131] By making the assumption he was asked to make, Mr. Kotecha did not express any professional opinion on whether the decrease in profits sustained by A&H during the “Damages Period” resulted from damage to A&H’s reputation that was caused by the alleged defamatory statements. He assumed this fact to be true. There is evidence in the record that there are other explanations for a decline in revenues or profits in the years after the Crown Defendants’ statements including that A&H ran fewer auctions and there were many complaints from customers, published online, about their experience with A&H. A&H undertook efforts to stop the publication of online complaints that it regarded as false and unjustified. There is also evidence that between 2009 and 2019, A&H conducted 671 auctions that generated $39,393,186.87 in gross sales of which $824,692.60, or 2%, came from sales of gemstones seized by the Bailiff for CRA.

[132] Because of the factual assumption he was asked to make, Mr. Kotecha’s evidence is of little value in assisting me to determine whether there is a causal link between the alleged defamatory statements and any harm suffered by A&H. I am unable to infer such a causal link from Mr. Kotecha’s evidence.

[133] In the absence of independent expert evidence from Mr. Kotecha on the causal link, I am left with statements from representatives of A&H about the causal link which are little more than bare assertions of harm. The evidence is insufficient to allow me to infer that there is a causal link between the alleged defamatory statements and the reputational harm claimed by A&H and the substantial monetary claim for lost profits calculated by Mr. Kotecha.

[134] The alleged defamatory statements were made by the Crown Defendants who were responsible for making statements on behalf of the Government of Canada and answering questions from the public and members of the media about matters of concern to the public. There is a legitimate public interest in protecting public representatives’ ability to make public statements in such circumstances.

[135] I conclude that A&H has failed to establish that the harm it suffered as a result of the alleged defamatory statements is sufficiently serious that the public interest in permitting the action to continue outweighs the public interest in protecting the Crown Defendants’ right of expression.

Motion by BBB

[136] The BBB moves to dismiss A&H’s action against it pursuant to s. 137.1(3) of the CJA.

[137] In the Amended Amended Statement of Claim, at paras. 26-27, A&H pleads the defamatory statements it alleges were made by the BBB:

26. Since 2012, BBB has continually published reports on A&H on its website containing numerous false statements that A&H is not authorized from the Government of Canada to sell seized goods (“BBB’s Defamatory Statements”), including the following alert (“Alert”), which A&H believes was posted by BBB in or around early July 2014:

! There is an alert for this business !

Please note that we have been advised by GC Surplus, “Crown Assets Distribution (CAD), of PWGSC, that they are the only authorized disposal agent for the sale of surplus federal and seized goods.” http://crownassets.pwgsc.gc.ca/mn-eng.cfm.

Consumers have also advised our office that they believe A&H Asset Auctions was selling government seized jewels on behalf of the Government of Canada however, A&H Asset Auctions does not have a direct relationship with the Canadian Government to sell government seized property ...

27. A&H pleads that PWGSC and Fabbro provided BBB with the false advice that was the basis for the Alert. BBB assigned A&H its lowest rating of “F” based on the false information it had received from PWGSC and Fabbro.

Has the BBB shown that that the proceeding arises from an expression made by the BBB that relates to a matter of public interest?

[138] BBB published the statements at issue. It submits that the statements are expressions and that the action against it arises from these expressions which relate to a matter of public interest.

[139] In support of this submission, BBB cites 910938 Ontario Inc. v. Moore, 2020 ONSC 4556 where, at paras. 18-22, the motion judge cited authorities which had stressed the public importance of online reviews of products or services. The motion judge found that the impugned statements in that case in an online review concerning the plaintiff’s store related to a matter of public interest. Other authorities are cited in support of this proposition: Canadian Thermo Windows Inc. v. Seangio, 2021 ONSC 6555, at paras. 86-92; Luc Crawford Design Inc. et al. v. Mullowney, 2021 ONSC 7849, at paras. 22-29.

[140] A&H accepts that BBB has met its burden in this respect.

[141] I am satisfied that BBB has shown that the action against it arises from expressions that relate to a matter of public interest.

Has A&H shown that there are grounds to believe that the action against BBB has substantial merit?

[142] A&H submits that it has met its burden of showing that there are grounds to believe that the action against BBB has substantial merit because it meets the tests for defamation in relation to two libellous statements: (i) BBB’s Alert text stating that A&H is not authorized by the Government of Canada to sell seized goods, and (ii) BBB’s statement that A&H does not have a direct relationship with the Canadian Government to sell government seized property.

[143] A&H submits that these statements are defamatory because:

a. They were published by BBB on its website;

b. They refer to A&H; and

c. They tended to lower the reputation of A&H in the eyes of a reasonable person.

[144] The evidence is that the Alert text was available online on BBB’s website between November 13, 2013 and February 5, 2016, and the “no direct relationship” statement was available online from July 10, 2014 to November 24, 2015.

[145] A&H submits that when the statements are considered in context and as a whole, having regard to the broad impression they convey and what a reasonable person would infer from the words used, the statements made by BBB tend to lower the reputation of A&H in the eyes of a reasonable person.

[146] On this motion, BBB relies on the Affidavit of Fiona Dunbar, who is the Director of Consumer Services for the BBB. Prior to holding this position, Ms. Dunbar was the Manager of Dispute Resolution & Information during which time she dealt with A&H on several occasions.

[147] Ms. Dunbar states that BBB received a number of complaints from the public concerning A&H beginning in September 2010 and she states that she had interactions with representatives of A&H and its representatives with respect to ratings assigned to A&H by BBB. Ms. Dunbar explains that she asked another BBB employee, Shaye Harris, to contact Mr. Fabbro to ask if A&H was authorized to auction items in the fashion advertised on its web site and she did so on December 7, 2012. In response, Mr. Fabbro stated that PWGSC had no relationship with A&H and that a cease-and-desist letter had been sent demanding that A&H stop using the Canadian flag to mimic the Federal Identity Program. Mr. Fabbro asked Ms. Harris to contact CRA to get a definitive answer about whether it used A&H to dispose of seized goods.

[148] Ms. Dunbar’s evidence is that following a customer complaint about a certificate that A&H was using, Ms. Harris asked Mr. Fabbro about the certificate and, in response, Ms. Harris received Mr. Fabbro’s October 29, 2013 email. With respect to the Alert, Ms. Dunbar’s evidence is that on November 13, 2013, Ms. Harris added custom text to the BBB website, quoting from the GC Surplus website, and stating that GC Surplus “is the only authorized agent for the sale of surplus federal and seized goods”.

[149] BBB submits that the alleged defamatory statements, the Alert text and the “no direct relationship” statement, are not obviously defamatory. With respect to the “Alert” text, BBB’s evidence is that this was taken from an official government website and correctly attributed to GC Surplus. BBB relies on evidence that Mr. Fabbro took no issue with the Alert after he reviewed BBB’s web site.

[150] With respect to the “no direct relationship” statement, BBB submits that there is no compelling evidence of a direct relationship between A&H and the government, and notes that GC Surplus denies such a relationship. BBB contends that it accurately stated that it had been advised by GC Surplus that it was the only authorized disposal agent for the sale of surplus federal and seized goods. BBB submits that the “no direct relationship” statement is true because there is no direct contractual relationship between A&H and the CRA. BBB contends that any indirect connection by A&H to CRA though A&H’s contract with the Bailiff does not make this statement substantially untrue.

[151] BBB submits that even if the alleged defamatory statements are technical defamatory, A&H has not shown that there are grounds to believe that the words used are capable of damaging the reputation of A&H. In support of this submission, BBB cites Pointes Protection, at para. 68, where the Supreme Court of Canada held that s. 137.1 of the CJA requires the responding party to show (i) the existence of harm, and (ii) causation – the harm was suffered as a result of the moving party’s expression.

[152] BBB relies on evidence from Salim Khan of A&H acknowledging that before the impugned statements were published on BBB’s web site, there were numerous complaints to CRA about A&H. BBB relies on evidence that Mr. Khan acknowledged that three years before the impugned statements were published by BBB, people were making announcements at auctions that the auctions are not legal. BBB relies on evidence from Mr. Khan that many statements were published online (that he regarded as false) that were critical of A&H. BBB relies on evidence of the CBC article and report and of an article published in the Toronto Star on February 8, 2011, and updated on February 16, 2011, that reported that Mr. Khan had consented to a penalty imposed by the Competition Bureau. This report was corrected on May 15, 2013 and the correction noted that, in fact, Mr. Khan was not a party to the Competition Bureau proceedings.

[153] BBB submits based on this evidence that before BBB published the alleged defamatory statements, A&H’s reputation was very poor and, for this reason, A&H has failed to show that there are grounds to believe that the alleged defamatory statements made by BBB tended to lower A&H’s reputation in the eyes of a reasonable person and caused significant harm to A&H.

[154] I do not accept this submission. Mr. Khan’s evidence is that the height of the complaints about A&H was when the BBB Alert went up. A&H relies on an affidavit from Sana Hussein, the Manager of Auctions at A&H, who deposed that A&H took various steps to stop online message boards from publishing false statements about A&H’s business. Ms. Hussein explains the steps that A&H took to mitigate damage to its reputation from published statements before the BBB statements were published. The evidence that A&H had other complaints about its business that may have affected its reputation is not sufficient to satisfy me that there are no grounds to believe that A&H’s claim has more than technical validity.

[155] There is a basis in the record for me to find that the main thrust of the statement made to the public in BBB’s Alert text is that A&H is not authorized to sell goods seized on behalf of the federal government and that it is doing so without the required authorization.

[156] The “no direct relationship” statement made by BBB did not include the explanatory context that was included in the statement made by CRA to the CBC (that CRA has no arrangement with A&H). Without this kind of explanatory context in BBB’s statement, there is a basis in the record for me to find that the main thrust of the statement that A&H does not have a direct relationship with the Canadian Government is that A&H is not authorized to sell property seized by the Government of Canada.

[157] I am satisfied that A&H has shown that there a basis in the record for me to find that A&H’s claim based on the alleged defamatory statements tends to weigh more in favour of A&H than BBB, is more than just technically valid and, therefore, has substantial merit.

Has A&H shown that there are grounds to believe that the BBB has no valid defence in the action?

[158] BBB has raised the defences of qualified privilege, justification, fair comment, and limitation defences under the Libel and Slander Act. A&H has the burden of satisfying me that there are grounds to believe that none of these defences is valid.

Defence of qualified privilege

[159] I first address BBB’s defence of qualified privilege.

[160] In Platnick, at paras. 121-122, the Supreme Court of Canada restated the basic principles that constitute the defence of qualified privilege:

An occasion of qualified privilege exists if a person making a communication has “an interest or duty, legal, social, moral or personal, to publish the information in issue to the person to whom it is published” and the recipient has “a corresponding interest or duty to receive it”. Importantly, “[q]ualified privilege attaches to the occasion upon which the communication is made, and not to the communication itself”. Where the occasion is shown to be privileged, “the defendant is free to publish, with impunity, remarks which may be defamatory and untrue about the plaintiff”. However, the privilege is qualified in the sense that it can be defeated. This can occur particularly in two situations: where the dominant motive behind the words was malice, such as where the speaker was reckless as to the truth of the words spoken; or where the scope of the occasion of privilege was exceeded.

For this reason, a precise characterization of the “occasion” is essential, as it becomes impressed with the limited, qualified privilege, which in turn becomes the benchmark against which to measure whether the occasion was exceeded or abused.

[161] The privilege afforded protection through the defence of qualified privilege is not grounded in free expression values but in the social utility of protecting particular communicative occasions from civil liability: Platnick, at para. 124.

(a) Are there grounds to believe the alleged defamatory statements were not published on occasions of qualified privilege?

[162] The first question is whether there are grounds to believe that the defence of qualified privilege is not available because the alleged defamatory statements were not made on an occasion of qualified privilege.

[163] A&H does not disagree that the alleged defamatory statements were published on occasions of qualified privilege. Nevertheless, I go on to address this question.

[164] In support of this motion, the BBB provided the affidavit of Fiona Dunbar, the Director of Customer Services for the BBB. In her affidavit, Ms. Dunbar explains that the Better Business Bureau is a federation of non-profit organizations with the mission to advance marketplace trust. The larger Better Business Bureau currently consists of about 100 independently incorporated local organizations in the United States, Canada, and Mexico, coordinated under the International Association of Better Business Bureaus based in Arlington Virginia. The Better Business Bureau is not affiliated with any governmental agency.

[165] Ms. Dunbar’s evidence is that the BBB is dedicated to a vision of an “ethical marketplace where buyers and sellers trust each other”. She states that a description of BBB Central Ontario’s mission is accessible through a link to the main BBB website and states:

BBB’s mission is to be the leader in advancing marketplace trust. We do this by

• Setting standards for marketplace trust

• Encouraging and supporting best practices by engaging with and educating consumers and businesses

• Celebrating marketplace role models

• Calling out and addressing substandard marketplace behaviour

• Creating a community of trustworthy businesses and charities

BBB sees trust as a function of two primary factors - integrity and performance. Integrity includes respect, ethics, intent, and working toward a diverse, inclusive and equitable marketplace. Performance speaks to a business’s track record of delivering results in accordance with BBB standards and/or addressing customer concerns in a timely, satisfactory manner.

[166] In her affidavit, Ms. Dunbar gives evidence that BBB’s mandate is “to act as a mutually trusted intermediary to resolve disputes and provide information to assist consumers in making wise buying decisions.” This mandate includes calling out and addressing substandard marketplace behaviour.

[167] I am satisfied that there is no basis in the record for me to find that the alleged defamatory statements were not made on an occasion of qualified privilege.

[168] In Clearview, the Court of Appeal addressed the scope of the occasion of qualified privilege and, in particular, whether the occasion of qualified privilege extended beyond the Township’s council meeting to the land use planning process conducted by the Township and, if so, whether it extended to the posting of public information on the Township’s website. In considering the scope of the occasion of qualified privilege, the Court of Appeal addressed the fact that a posting on a publicly available website makes content searchable and accessible worldwide.

[169] The Court of Appeal held that the purpose of the Township’s website is to keep residents of the Township informed of and give them the opportunity to be involved in all matters that may affect their rights, obligations, and daily life as residents. The Court of Appeal held that while the content of the website is accessible to others, that does not undermine the reciprocal duty and interest between the Township and its residents where the website is the most efficient, accessible and cost-effective method of allowing the public access to government information. The Court held that while the Township is required to exercise some prudence in the operation of its website, the need for which is amplified when it is posting comments from the public not written or edited by the Township, the scope of the privilege is broad. Where relevant comments are made in good faith and not with malice, they should not exceed the privileged occasion. See Clearview, at paras. 84-90.

[170] I am satisfied that BBB had a duty to share, and an interest in sharing, information with the public about concerns related to A&H. I am satisfied that the public had an interest in receiving such information. The scope of the occasion of qualified privilege extends to BBB’s publications to consumers, through its website, of information relating to businesses, including A&H, that provide goods or services to the public, including information that is critical of businesses that engage in substandard marketplace behaviour, provided that such information is given in good faith and without malice.

(b) Has A&H satisfied me that there are grounds to believe that BBB’s dominant motive in publishing the alleged defamatory statements was malice or that the scope of the occasion was exceeded?

[171] The defence of qualified privilege can be defeated where the dominant motive for publishing the statement is malice or where the scope of the occasion of privilege is exceeded: Platnick, at para. 121.

[172] In Hill v. Church of Scientology of Toronto, 1995 CanLII 59, the Supreme Court of Canada, at para. 145, explained that malice is commonly understood, in the popular sense, as spite or ill-will. It also includes any indirect motive or ulterior purpose that conflicts with the sense of duty or the mutual interest which the occasion created. When the occasion is shown to be privileged, the bona fides of the defendant is presumed and the defendant is free to publish, with impunity, remarks which may be defamatory and untrue about the plaintiff. The privilege can be defeated if the dominant motive for publishing the statement is actual or express malice. See also Platnick, at para. 121.

[173] A&H submits that on the evidence in the record, the defence of qualified privilege is defeated.

[174] A&H submits that BBB failed to conduct any independent diligence to substantiate the truth of the Alert text and the “no direct relationship” statement, and their sting. A&H submits that the communications between Ms. Harris and Mr. Fabbro show a concerning lack of independence, impartiality and skepticism on the part of Ms. Harris and, her superior, Ms. Dunbar. A&H contends that the communications show that Ms. Harris accepted what Mr. Fabbro said without question.

[175] As an example, A&H cites Mr. Fabbro’s assertion that the certificate was “false” and “totally fabricated” when, in his evidence on cross-examination, Mr. Fabbro agreed that the certificate correctly stated that the Bailiff awarded the Agreement to A&H. A&H relies on Ms. Harris’ evidence that as of July 10, 2014, based on emails she had received from Mr. Schwarzer (the Bailiff’s representative), she knew the statement in the certificate certifying that the contract for gems and jewels seized on behalf of the Government of Canada was awarded to Asset Auctions was true. A&H relies on evidence that with this knowledge, BBB did not withdraw the Alert text which remained on its web page from November 13, 2013 to February 2016.

[176] With respect to the “no direct relationship” statement, A&H cites evidence of an email from Mr. Schwarzer to Ms. Dunbar dated July 4, 2014 in which Mr. Schwarzer advises that he contracted with A&H to liquidate the gem stones seized on behalf of CRA. Mr. Fabbro’s evidence is that Ms. Harris contacted him by email about Mr. Schwarzer’s email and he spoke with her by phone on July 9, 2014. Ms. Harris’ notes of this call state that Mr. Fabbro advised that the wording in Mr. Schwarzer’s email (by inference, his July 4, 2014 email) is a “stock response” that was true 6-7 years ago and “they can no longer use this wording ...”. The “no direct relationship” statement was published on the BBB website the next day. A&H submits that by following this process and contacting Mr. Fabbro directly instead of attempting to contact CRA, BBB failed to conduct an independent investigation on the veracity and sting of the statement. A&H relies on evidence that on July 8, 2014, BBB again published the Alert, without independent verification as to the truth of the statements in the Alert and after receiving Mr. Schwarzer’s July 4, 2014 confirmatory email.

[177] A&H submits that by accepting statements by Mr. Fabbro at face value and by failing to undertake its own independent investigations to verify what it was told, BBB revealed that it had an ulterior motive that conflicts with the mutual interest created by the occasion. A&H submits that the evidence shows that BBB acted with reckless disregard or indifference for the truth and that the dominant purpose behind the statements was malice.

[178] Ms. Dunbar’s evidence is that in her capacity as the Manager of Dispute Resolution & Information of BBB, she dealt directly with A&H on several occasions. She explains that her job duties included analyzing complaint activity for potential accredited businesses who have a large volume or pattern of complaints and reviewing the information with BBB’s CEO and providing recommendations.

[179] Ms. Dunbar’s evidence is that BBB first received a complaint about A&H on September 21, 2010. This was the first of 21 complaints about A&H that BBB received from members of the public between September 21, 2010 and January 19, 2016.

[180] Mr. Dunbar explains in her affidavit that she contacted Mr. Fabbro (the Senior Business Development Manager of GC Surplus, a branch of PWGSC), on December 7, 2012 to ask if A&H was authorized to auction items in the fashion advertised on its website. In response, Mr. Fabbro advised Ms. Harris that PWGSC had no relationship to A&H whatsoever. He further advised that PWGSC’s legal counsel had sent A&H a cease and desist letter demanding that it stop using the Canadian flag to mimic the Federal Identity Program. Mr. Fabbro’s December 7, 2012 email to Ms. Harris states that “Canada Revenue Agency has a decentralized organization structure and their Sheriff’s may use [A&H]. You should contact CRA directly, as my past attempts to get a definitive answer have been unsuccessful.”

[181] In her affidavit, Ms. Dunbar refers to a media release which indicated that, allegedly, A&H had paid a settlement for misrepresenting itself as a government auctioneer. Ms. Harris determined that the settlement was actually paid by another business which was no longer active and she found no proof of a link between this business and A&H. Ms. Harris was unable to verify if A&H was in fact selling government seized property.

[182] Ms. Dunbar’s evidence is that BBB received a complaint on October 1, 2013 from someone who had been provided with what was purportedly a government certificate by A&H. This customer also sent the complaint to Mr. Fabbro. Ms. Harris contacted Mr. Fabbro about this complaint. Ms. Dunbar refers to Mr. Fabbro’s October 29, 2013 email in which he states that the certificate is “totally fabricated” and that A&H is “in no way affiliated with the federal government” and that A&H’s “claims of selling government property are totally false”. BBB did not repeat these statements on its website.

[183] BBB relies on evidence from Ms. Dunbar that prior to the commencement of this litigation, the only evidence it received in support of A&H’s advertising claims were from the principal of the Bailiff who, in July 2014, provided documents that showed a direct relationship between the Bailiff and A&H, but not between A&H and the CRA.

[184] Ms. Dunbar’s evidence is that she specifically requested that A&H provide supporting documents from the CRA establishing that A&H was legally entitled to make the claims being made, but no further evidence was provided. Ms. Dunbar’s evidence is that none of the documents upon which A&H relies in this litigation to show a business relationship with CRA were provided to BBB prior to this litigation.

[185] BBB relies on the evidence that it did not publish all information it received from Mr. Fabbro and exercised its own judgment when it made its publishing decisions.

[186] BBB’s evidence is that its ratings were made using a complex process which, for A&H, fluctuated over time. BBB provided evidence of the ratings for A&H during the period from October 26, 2010 to the present which vary considerably and range from A+ to F.

[187] In support of its submission that the evidence does not show that it acted with malice, BBB also relies on evidence that before it received notice of this litigation, it took down the Alert and the “no direct relationship” statement from its web site. BBB took down the “no direct relationship” statement in November 2015, and the Alert text was removed from BBB’s website on February 5, 2016, before service of the statement of claim.

[188] Mr. Fabbro was a government representative who was specifically authorized to respond to questions from organizations like BBB. The government website from which BBB took information that it published in the Alert provided information that the public, including BBB, could reasonably rely on.

[189] When I consider the evidentiary record, I am not satisfied that A&H has shown that BBB was reckless or turned a blind eye to the information it received from Mr. Fabbro or that, in the circumstances, it was not reasonably able to accept statements made by Mr. Fabbro, an authorized government representative who was acting in the course of his authority, or information in statements in a public government website, without further verification. I am not satisfied that there are grounds to believe that BBB set out to harm A&H or that it deliberately failed to verify information it received to avoid finding information that supported A&H’s public statements concerning its relationship with the federal government. The evidence shows Ms. Dunbar sought information for A&H that was not provided, and that she refrained from causing BBB to publish information about complaints that were not verified. The ratings assigned by BBB to A&H, which ranged from very poor to very good, are a basis in the record that tends to show that BBB, in its dealings with A&H, was not motivated by malice.

[190] The evidentiary record at this stage of the action is a fulsome one and, when I review it, the record does not support a finding, on the standard explained in Pointes Protection, that the BBB acted without reasonable and necessary skepticism, in the absence of good faith, and with the dominant motive of malice, when it received and relied on information from Mr. Fabbro and PWGSC and published the alleged defamatory statements.

[191] A&H has not satisfied me that there is a basis in the record for me to conclude that BBB acted with the dominant motive of malice when it published the Alert or that the published statements exceeded the occasion of qualified privilege, such that the defence of qualified privilege would be defeated.

Defence of fair comment

[192] BBB also relies on the defence of fair comment.

[193] This defence applies where a statement (i) is on a matter of public interest; (ii) is based on fact; (iii) is recognizable as comment; (iv) is one that any person could honestly make on the proved fact; and (v) was not actuated by express malice. Words that may appear to be statements of fact may, in pith and substance, be properly construed as comment. Comment may be “deduction, inference, conclusion, criticism, judgment, remark or observation which is generally incapable of proof” and should be recognizable as comment by a reasonable viewer or reader and is generously interpreted. See B.W. Blair v. Premier Doug Ford, 2020 ONSC 7100, at paras. 31, 37.

[194] There is a basis in the record for me to find that the Alert text and the “no direct relationship” statement, read in context and as a whole, would be understood by a reasonable person to be statements of fact and not recognizable as comment.

[195] I am satisfied that there are grounds to believe that BBB has no valid defence of fair comment.

Defence of justification

[196] BBB submits that the statement in the Alert that GC Surplus is the only authorized disposal agent for the sale of surplus federal and seized goods is substantially true and was made as an alert to their customers without additional comment. BBB says that this statement does not say that A&H is not selling government items. BBB submits that the statement that A&H does not have a direct relationship with the Canadian Government to sell government seized property is also substantially true.

[197] There is a basis in the record for me to find that the main thrust of the Alert text is that A&H is not authorized to sell goods seized on behalf of the federal government and that it is doing so without the required authorization, and that the main thrust of the statement that A&H does not have a direct relationship with the Canadian Government is that A&H is not authorized to sell property seized by the Government of Canada, whether directly or through agents. The evidence shows that A&H entered into the Agreement with the Bailiff that authorized it to sell the gemstones.

[198] I am satisfied that there is a basis in the record and at law for me to conclude that BBB has no valid defence of justification in this action.

Defence under the Libel and Slander Act

[199] Pursuant to section 5 (1) of the Libel and Slander Act, no action for libel in a newspaper or broadcast lies unless the plaintiff gives the defendant notice of the matter complained of within six weeks of the date that the libel came to the plaintiff’s attention. The notice is to be served in the same manner as a statement of claim or by delivering it to a grown-up person at the chief office of the defendant. Section 6 of the Libel and Slander Act requires a plaintiff to issue the statement of claim within three months of the libel coming to the plaintiff’s knowledge.

[200] BBB relies on evidence that the Alert text first came to A&H’s attention on July 3, 2014 and, at that time, the “no direct relationship” statement was also posted along with the “F” rating. BBB did not receive a Notice of Libel until November 20, 2015 which was delivered by courier and not served in the same manner as a statement of claim. The action was commenced by A&H by issuance of a Notice of Action on November 13, 2015.

[201] BBB submits that on this evidence, it has a defence to the action under the Libel and Slander Act.

[202] BBB’s limitation defence under the Libel and Slander Act was not pleaded in its Statement of Defence or expressly stated as a ground for BBB’s motion in its Notice of Motion. A&H contends that it has been deprived of an opportunity to provide a full answer to this defence and that it did not file any evidence on this motion in response to submissions relying on this this defence. A&H submits that, on this basis, the limitation defence under the Libel and Slander Act should not be considered because it is not a defence that BBB has put in play.

[203] BBB submits that it is not required to plead the limitation defence in its statement of defence or in its notice of motion in order to raise this defence on a motion brought pursuant to s. 137.1 of the CJA. BBB points to s. 137.2(1) of the CJA which provides that such a motion may be made at any time after the proceeding has commenced. In the decision of the Court of Appeal for Ontario in 1704604 Ontario Ltd. v. Pointes Protection Association, 2018 ONCA 685, at paras. 25 and 119, the Court confirmed that the absence of a statement of defence is not determinative on such a motion. The Court of Appeal, at para. 83, addressed the “no valid defence” requirement:

I would add two further observations with respect to the “no valid defence” requirement in s. 137.1(4)(a)(ii). That provision requires the plaintiff to satisfy the motion judge that there are reasonable grounds to believe that the defendant has “no valid defence” to the plaintiff’s claim. This section would be unworkable if the plaintiff were required to address all potential defences and demonstrate that none had any validity. I think the section contemplates an evidentiary burden on the defendant to advance any proposed “valid defence” in the pleadings, and/or in the material filed on the s. 137.1 motion. That material should be sufficiently detailed to allow the motion judge to clearly identify the legal and factual components of the defences advanced. Once the defendant has put a defence in play, the persuasive burden moves to the plaintiff to satisfy the motion judge that there are reasonable grounds to believe that none of the defences put in play are valid.

[204] The BBB advanced a proposed defence based on the Libel and Slander Act provisions in the material filed on its motion by relying on this defence in its factum. BBB says that all relevant facts to this technical defence are set out in the evidence on this motion. The BBB notes that A&H pleaded the notice requirements of the Libel and Slander Act in all versions of its pleading.

[205] I am satisfied that BBB put this defence in play through reliance on it in its factum. A&H has not shown that it was deprived of relying on relevant evidence to respond to this defence.

[206] In support of its submission, BBB relies on the decision in Bangash v. Patel, 2021 ONSC 7620; aff’d 2022 ONCA 763. In Bangash, on a motion brought pursuant to s. 137.1 of the CJA, the motion judge addressed the defence that notice under s. 5(1) of the Libel and Slander Act of the matter complained of was not given in a timely way.

[207] The defendant had published the alleged defamatory statements including through posting online on a Facebook account and on a website dedicated to the posting of petitions. The plaintiff took the position that the online publication is not the equivalent of “broadcasting” within the meaning of s. 5(1) of the Libel and Slander Act. The motion judge held:

This is not, in my view, the appropriate case to decide whether publishing defamatory statements online, on social media or other websites, is the functional equivalent to broadcasting, such that the notice requirements of s. 5(1) are triggered. It is not necessary that I make that determination, because the issue before me is whether Mr. Bangash has met his onus to establish grounds to believe that Mr. Patel has no valid defence(s) to his claim. Recall that the “grounds to believe” standard requires only that there be a basis in the record and in law to find that there is no valid defence.

In this instance, the law is clearly unsettled. The notice requirement of s. 5(1) may well apply. I am unable to conclude, in the result, that there are grounds to believe there is no valid defence under s. 5(1).

[208] A contrary decision was made in an earlier decision, Kam v. CBC, 2021 ONSC 1304. In Kam, the motion judge concluded that the fact that the law is unsettled as to whether publications online fall within the meaning of “broadcasting” in s. 5(1) of the Libel and Slander Act is a basis in the record or grounds to believe that this defence does not weigh more in favour of the moving parties. The motion judge held that determination of this legal issue is best left to a court hearing a case in full.

[209] The decision in Bangash was made after the decision in Kam. The decision in Bangash was upheld on appeal, although the appeal decision did not address the “no valid defence” prong of the test under s. 137.1(4). I agree with the reasoning in Bangash. I am not satisfied that there are grounds to believe that BBB has no valid defence under the Libel and Slander Act.

Has A&H shown that there are grounds to believe that the harm likely to have been suffered by it as a result of the BBB’s expressions is sufficiently serious that the public interest in permitting the action to continue outweighs the public interest in protecting that expression?

[210] In my reasons on the motion by the Crown Defendants, I set out the legal principles that apply at this stage of the analysis.

[211] In his affidavit, Mr. Khan states that the alleged defamatory statements made by the Crown Defendants and the BBB “have virtually destroyed Asset Auctions reputation”. Mr. Khan confirms that the information in Mr. Kotecha’s report is accurate.

[212] Before the alleged defamatory statements were published by the BBB, A&H had experienced customer complaints including through online websites. A&H hired additional personnel to address these complaints and their effects. A&H identified only three customers who allegedly cancelled sales after reviewing the BBB website.

[213] Mr. Khan’s statement and the accompanying assertions of vulnerability and harm based upon the public’s inherent trust in the BBB fall into the category of bald assertions that do not provide an adequate evidentiary foundation that allows me to infer a causal link between the BBB’s alleged defamatory statements and harm suffered by A&H.

[214] For the reasons I have given, the expert evidence upon which A&H relies to show that it suffered substantial harm in the form of monetary damages is of little value because of the factual assumption that the expert was instructed to make that A&H’s decline in sales and associated loss of profits were caused directly by the alleged defamatory statements.

[215] The BBB’s overarching goal is to protect the public by assisting consumers in making wise buying decisions. There is a public interest in promoting this goal, provided that BBB acts in good faith and without malice in its public statements.

[216] A&H has not shown that it suffered harm as a result of BBB’s impugned expressions in relation to A&H that is sufficiently serious that the public interest in permitting this action to continue outweighs the public interest in protecting BBB’s expressions to the public.

Disposition

[217] For these reasons, I grant the motions by the Crown Defendants and by the BBB pursuant to s. 137.1 of the CJA.

[218] The action by A&H against the Crown Defendants and against BBB is dismissed.

[219] If the parties are unable to resolve costs, they may make written submissions. The moving parties may make written submissions within 14 days (not longer than 5 pages excluding costs outline). A&H may make responding submissions (also not longer than 5 pages in response to the submissions of each moving party, excluding costs outline) within 14 days thereafter. The moving parties, if so advised, may make reply submissions (not longer than 2 pages) within 5 days thereafter.

CAVANAGH J.

Released: 2023-11-03