2024 ONSC 1689

Court File and Parties

COURT FILE NO.: CV-23-00695418-000 DATE: 20240321 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: RITA KATZNELSON, Plaintiff AND: CANADIAN UNDERSEA AND HYPERBARIC MEDICAL ASSOCIATION, KENNETH LEDEZ, RON LINDEN, JAY MACDONALD, GEOFF ZBITNEW, SHERRI FERGUSON, JULIE MALONE, CAROLINE BAIN and GEORGE HARPUR, Defendants

BEFORE: AKAZAKI J.

COUNSEL: Young Park and Alexander Evangelista, for the Plaintiff Neil M. Abramson, Marco P. Falco, and Anne Lewis, for the Defendants Kenneth LeDez and Ron Linden Sean McGarry, for the Defendants Canadian Undersea and Hyperbaric Medical Association, Jay Macdonald, Geoff Zbitnew, Sherri Ferguson, Julie Malone, Caroline Bain and George Harpur

HEARD: January 25, 2024, followed by written costs submissions

COSTS ENDORSEMENT

Overview

1The plaintiff seeks an award of costs resulting from her success in resisting a motion by the defendants Kenneth LeDez and Ron Linden pursuant to s. 137.1 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (CJA), to dismiss the action against them on the basis that it is a strategic lawsuit against public participation (SLAPP). In the alternative, the motion required certain pleadings derivative of the libel claim to be struck under rule 21.01(1)(b) as disclosing no reasonable cause of action. The moving parties were partially successful in that second segment of the motion.

2The plaintiff was substantially successful in the motion. She was wholly successful in the anti-SLAPP part of the motion. The pleadings part ended in a divided outcome. The moving parties concede the plaintiff’s overall success. They argue the plaintiff’s concession of a threshold public interest dimension created sufficient bona fides to apply the default rule that a successful respondent to an anti-SLAPP motion is not entitled to costs. For the reasons that follow, I agree with the moving parties. Given my findings on the motion that it was the moving parties, LeDez in particular, who attempted to suppress the plaintiff’s participation in an area of medicine, my concurrence with their argument regarding costs stems from a narrow statutory interpretation of the scope of the motion judge’s discretion.

RULE OF NON-ENTITLEMENT

Rule of Non-Entitlement

3The success of a party in the motion determines which of subsections 137.1(7) or (8) of the CJA applies:

Costs on Dismissal

(7) If a judge dismisses a proceeding under this section, the moving party is entitled to costs on the motion and in the proceeding on a full indemnity basis, unless the judge determines that such an award is not appropriate in the circumstances. 2015, c. 23, s. 3.

Costs if motion to dismiss denied

(8) If a judge does not dismiss a proceeding under this section, the responding party is not entitled to costs on the motion, unless the judge determines that such an award is appropriate in the circumstances. 2015, c. 23, s. 3.

4Subsection (8) does not entitle the successful plaintiff to costs of the motion. On the contrary, the legislature has led with an emphatic clause that the plaintiff is not entitled. The issue for me to decide is whether I should exercise my discretion under the exemption clause of that provision. I disagree with the dicta characterizing these words as a presumption. It is better characterized as a rule that is subject to a judicial discretion to relieve against the lack of entitlement.

5The amount in issue is not insubstantial. The plaintiff incurred $221,101 in direct legal expenses on account of the motion. Her claims for partial and substantial indemnity are $133,318 and $198,799 respectively. Costs of this type of motion have often been disproportionate with the early and summary triage procedure the legislative drafters intended. The Court of Appeal’s obiter that full indemnity costs should not exceed $50,000, in Park Lawn Corporation v. Kahu Capital Partners Ltd., 2023 ONCA 129, at para. 39, has hence been defied by various large awards, including its own upholding of a $500,000 costs award in The Catalyst Capital Group Inc. v. West Face Capital Inc., 2023 ONCA 381, at para. 160.

6I, for one, was surprised neither by the amount incurred by the plaintiff nor by parties in other reported decisions. Despite the intended summary nature of the motion, s. 137.1 requires plenty of lawyering to which the legislative drafters evidently failed to pay much attention. Any motion that requires a multi-step argument, including elements of logical subsidiarity, will cost a client to prepare the evidentiary record and the legal arguments.

7The threshold argument under subsection (3) is not too onerous, but the public interest threshold must withstand scrutiny in the balancing in para. (4)(b). Dismissal is mandatory under (3) based on a low public-interest test. However, that mandatory language is tempered by the discretion to preserve the action under subsection (4). The discretion entails a further multi-part merits and balancing analysis that turns the respondent’s onus into a paper trial. That discretionary subsection is the protection afforded to “legitimate defamation claims”: Ferreira v. Da Costa, 2019 ONSC 2990, at para. 4. However, the unintended result of the multi-stage analysis with shifting onuses is that it may be even more complicated than the trial of the libel suit. In Bent v. Platnick, 2020 SCC 23, [2020] 2 SCR 645, Côté J. had to remind the reader in the 158th paragraph that she was not purporting to decide any question in the litigation on a s. 137.1 proceeding.

8The multi-stage test with shifting onuses is not unique to the Ontario statute. For example, s. 4 of the British Columbia statute, Protection of Public Participation Act, SBC 2019, c. 3, adopts a similar five-part test. It is not my role to comment on the efficacy of the drafting apart from stating that the spiralling legal costs of bringing and defending the motions is evidence of legislators’ failure to anticipate an obvious problem. This strains even the heavy presumption of what Prof. Sullivan has called the presumption of legislative perfection: Sullivan, The Construction of Statutes, Seventh Ed. (Toronto: Nexis Lexis, 2022), at pp. 209-10. Leaving issues of unfairness to motion judges’ residual discretion in exceptional cases is an inadequate measure if the nature of the motion makes escalation of legal costs expected and unexceptional.

9There may be some comfort to plaintiffs that survival of an anti-SLAPP motion is akin to an interlocutory injunction in commercial law in encouraging defendants to settle. In libel cases, where the defamation has been fixed in writing and the substantive defences have not withstood the provisional screening of clause (4)(a)(ii), the only genuine issue may turn out to be the scope of damages. The issue of costs also seems to be of particular concern to Ontario litigants, as costs awards in all other provinces tend to be more modest. That said, one cannot blame a plaintiff in the position of Rita Katznelson, accused of unsafe medical practices and billing fraud, for instructing her counsel to do everything they can to preserve her right to judicial vindication. If she had withdrawn her suit because of the inordinate expense of responding to an anti-SLAPP motion, the discontinuance would be used against her the colleagues who practice off-label hyperbaric therapy. Anti-SLAPP laws were never intended to serve as virtual bully pulpits. I accept that she had to throw every resource against the motion.

10The anti-SLAPP law requires so much up-front lawyering that the legal expenses can far exceed the traditional boundaries of expensive motions such as rule 20 and rule 21 motions, in which a discrete issue of fact or law can deal a fatal blow to an action. The unbalanced costs regime also encourages defendants to bring the motion as a strategic move to avoid facing damages and costs awards at trial. Since so much of the legal work goes into the satisfaction of “grounds to believe” in the merit of a case and in the absence of a defence, the defence can avoid much of the costs consequences of trial preparation because the legal work in creating the record is largely overlapping.

11Despite the appearance that the courts often exercise discretion not to follow the mandatory portion of subsection (8), part of this may come down to the difficulty in accepting the fairness of the “heads I win, tails you lose” algorithm when read with the presumptive full indemnity costs to a successful moving party under subsection (7): Park Lawn Corp. v. Kahu Capital Partners Ltd., 2022 ONSC 4451, at para. 9. This logic may jar the judicial sensibilities, but the will of the legislature in stating the non-entitlement must be observed.

12The neutral rule of construction for statutes conferring judicial discretion is that the legislature has entrusted the courts to make “a decision that is sensitive to the circumstances of each case”: Sullivan, at p. 181. Where the discretion is couched in words following “unless,” however, the language is not neutral. The intention is to entrust the judge with the task of identifying a proper exception to the rule: Griffiths v. Winnipeg Electric Ry. Co. (1907), 16 Man. R. 512 (C.A.), at 521. Words carving out exceptions to general rules always command narrow readings.

13Here, the court should not construe the legislative wording that the successful respondent is “not entitled to costs” as meaning simply that it evens out the presumption under rule 57.01(1) that costs follow the result. One reason for that is that the wording of s. 131 is already even:

131 (1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid. R.S.O. 1990, c. C.43, s. 131 (1)

14The two costs provisions in the CJA must therefore be read together. As Houlden J.A. stated in G. T. Campbell & Associates Ltd. et al. v. Hugh Carson Co. Ltd. et al. (1979), 99 DLR (3d) 529 (Ont. C.A.) at 539:

Amendments to a statute should be construed together with the original statute as part of a coherent system of legislation. Further, if the ordinary meaning of the word in a statute leads to an unreasonable or unjust result, the Court should look for another possible meaning that will avoid that result.

15Unfortunately, there is no other such possible meaning. The consequence of the Ontario Legislature’s will in enacting subsection 137.1(8) is that parties whose libel suits survive an anti-SLAPP motion on the basis that the action is not a SLAPP are not entitled to costs unless the circumstances bring the case outside that statement of non-entitlement. This is not an unjust incongruity or conflict between s. 131 and s. 137.1. Rather, the substantial potential for injustice is integral to the statute. The court’s ability to protect parties from the sharp edges of the law does not extend to redrawing its boundaries when the law has been enacted by an elected political assembly. Until the legislature redraws them, the court must recognize that the two sections entail different ideas regarding the justice of costs awards than the court of Ontario, and Toronto in particular, have become accustomed to applying.

16The courts should also consider the origin of anti-SLAPP legislation in the David v. Goliath dynamic. At a time when the rich and powerful used libel law to avoid criticism, law reformers intended the costs consequences to favour defendants. There is nothing inherently wrong in some forms of injustice if the decision is made by elected officials within the scope of their constitutional powers.

SHOULD THE COURT EXERCISE DISCRETION?

Should the Court Exercise Discretion?

17The plaintiff has cited the general thrust of my reasons for dismissing the motion, that the moving parties’ use of libel as a means of suppressing the plaintiff’s innovative medical practices and research, was an abusive use of s. 137.1. Arguably, every failed motion is a candidate for such characterization. This one was probably on the wrong side of the boundary. The question is whether every abuse of process justifies exclusion from the protections from an express statement of legislative will. Legislative drafters assume a degree of judicial inertia, and the purpose of parliamentary committees is to strike balances based on political if not technical considerations.

18Defamation is almost axiomatically injurious and invidious: Hill v. Church of Scientology of Toronto, [1995] 2 SCR 1130, at para 165. A libel case that survives a s. 137.1 motion is almost bound to involve conduct tainted by zeal or malice, or at least some breach of the boundaries of occasion, on the part of the utterer or publisher of the words. Unfortunately, we live in an era in which people are quick to accuse their fellow human beings of corruption and other failings. In an anti-SLAPP motion, the legal incentive to perpetuate the defamation by advancing truth or privilege as valid defences necessarily increases the legal and economic jeopardy of the proceeding.

19In Veneruzzo v. Storey, 2018 ONCA 688, at para. 39 the Ontario Court of Appeal stated that the underlying purpose and costs shield “disappears when the lawsuit has none of the characteristics of a SLAPP, and the impugned expression is unrelated to a matter of public interest.” This extremely high bar seems to have been implicitly lowered in 2110120 Ontario Inc. v. Buttar, 2023 ONCA 539, at para. 100-01, when the same court held that the discretion to depart from the presumption against awarding costs could be made at the subsection (4) stage, after the defence has established a public interest. For what it may be worth, the Supreme Court in Platnick, at para. 179, upheld the default rule on the basis that the motion was not frivolous with an intent to delay the claim. A similar result appeared in 1704604 Ontario Ltd. v. Pointes Protection Association, 2020 SCC 22, [2020] 2 SCR 587, at para. 129.

20The reality of judicial discretion is that if I were to exercise discretion to award costs to the plaintiff on the basis that the case is based on excessive zeal or bullying in a professional setting starting and ending with libel, the next case will require consideration of an analogous exception to the statutory rule. Soon the exception would become the rule. As I alluded in para. 13 of my motion endorsement, there is something about the dynamic of medical politics that causes libel and suppression of legitimate innovation to become a recurrent theme. Although the evidence on the motion provided grounds to believe this case fits that pattern, the antecedents had enough of the patina of medical debate to keep the motion within the rule rather than the exception of legitimate libel suits that also originate in an opposition of ideas.

21To the extent the anti-SLAPP legislation has become a form of legal Teflon, it is for the legislature to resolve the dual flaws of s. 137.1 motions in that they are so expensive to bring and to defend and in that the cost rule does not encourage more hesitancy on the part of defamers. Thus, despite I sense my ruling will offend the ordinary sense of justice in civil cases under rule 57 and s. 131, I am compelled to apply the general rule in s. 137.1(8) and decline the invitation to exercise my discretion to award costs of the motion.

22Finally, I have been informed that the plaintiff and CUHMA settled their costs issue, on the basis that CUHMA will pay the plaintiff $4,000.00, all-inclusive, for the costs of the motion. This amount appears reasonable to deal with the fact, as outlined in paras. 30-40 of my motion endorsement, that the CUHMA tried to ride on the coattails of moving parties without having brought its own motion. Given that this issue was a sidecar to the motion and not part of the s. 137.1 issue, the settlement appears reasonable. Order to issue that the plaintiff is not entitled to the costs of the motion, except that CUHMA shall pay the plaintiff the amount of $4,000.00 in respect of the appearance at the hearing.

Akazaki J.