Court File and Parties

Court File No.: CV-22-00681952-0000 Date: 2024-06-19 Superior Court of Justice - Ontario

Re: Julian Devante, Plaintiff And: Arnold Beckerman and Wayne Berry and WWW.SYNTHIONENERGY CO., Defendants

Before: Akazaki J.

Counsel: Julian Devante, Self-Represented Arnold Beckerman, Self-Represented Wayne Berry, Self-Represented WWW.SYNTHIONENERGY CO., not represented by counsel

Heard: June 12, 2024

Endorsement

Introduction

[1] The defendants brought a combined motion (a) to strike out the statement of claim in whole or in part and (b) security for costs.

[2] The plaintiff’s statement of claim seeks damages and an injunction requiring the defendants to remove “false and libelous information” contained in the above-cited website. After a lengthy and loaded recitation of background history between the parties, including past wrongs committed by the individual defendants, the actual cause of action begins in the third line of para. 10, in which the plaintiff alleges that the defendants published this defamatory content:

… describing the plaintiff as “Julian Devante a fraudster” and that “the Toronto police is after Julian Devante for fraud”.

Further, the defendant’s said Judge Newbold [ sic ] referred to Julian Devante as a “crook” and that he “fraudulently tried to sell technology that did not belong to him”.

[3] The moving parties argue that the plaintiff seeks to relitigate the prior oppression proceedings under the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (CBCA) in court file no. CV-14-10751-00CL. That matter concluded with Mr. Devante losing his shares in Synthion Energy Inc. because he failed to comply with various court orders, including costs and security for costs.

[4] The moving parties also contend the plaintiff must post security for costs, because of his failure to pay about $30,000 in costs orders from the oppression proceeding.

[5] The principal issue, striking out pleadings, turned out to uncontentious. The moving parties conceded that paras. 10-16 of the statement of claim have not previously been determined by the court and therefore could not be considered vexatious. Those were the libel pleadings. The plaintiff also conceded that the prior pleadings in paras. 6-9 were also unnecessary restatements of background from the previous proceedings.

[6] The security for costs issue turned out to be less straightforward, as I will explain.

[7] Before I turn to the two issues on the motion, however, I will deal with the issue of the self-represented individual defendants purporting to act for the corporation.

Preliminary Issue: Corporate Defendant’s Representation

[8] The moving defendants included Synthion Energy Inc., the correct name of the corporation named by reference to its website uniform resource locator (URL). The title of proceedings misplaced the dot, and the correct URL is www.synthionenergy.co. For present purposes, I will treat the name in the title of proceedings as the business name of the corporation. The plaintiff can rename the corporate defendant at another time, either on consent or on motion with appropriate evidence.

[9] I heard submissions from the individual parties and declined to attribute any of the submissions to the corporation. The individual defendants are the sole shareholders and directors of Synthion Energy Inc., because of the conclusion of the previous law suit. However, subrule 15.01(2) of the Rules of Civil Procedure requires a corporation to be represented by a lawyer except with leave of the court.

[10] It was urged on me that, in the previous oppression proceedings, Messrs. Berry and Beckerman were permitted to act for the company because all the parties ran out of funds to pay their lawyers. The first part of that assertion proved unsupported. The appearance lists in the various judicial endorsements showed the corporation was unrepresented from the outset and was a respondent to the suit brought by Messrs. Berry and Beckerman.

[11] The actual alignment of interests in the previous proceeding does not determine the issue here. Oppression remedy cases involving corporate control are sui generis on this point because they are often unrepresented and named only as necessary parties under rule 5.03 of the Rules of Civil Procedure. The cases involve a tug of war between “complainants,” as defined by ss. 238 and 241 of the CBCA, and those alleged to have oppressed them. The corporation is usually a neutral stakeholder.

[12] This case is different from an oppression action. The plaintiff is suing the corporation because its website is the publisher of the alleged libel. The plaintiff and the corporation are now strangers of one another. If Synthion Energy Inc. intends to defend the claim for damages and avert an injunction, it needs to be represented by a lawyer unless it obtains leave of the court to proceed otherwise. No such motion was properly before me.

[13] The absence of representation of the corporate defendant can have an impact on the motion, because the statement of defence cannot be presumed to represent its position on the merits.

Striking Pleadings in the Statement of Claim

[14] The notice of motion did not specify whether it was brought under rule 21.01(3)(d) or rule 25.11 of the Rules of Civil Procedure. The way it was argued, both this part of the motion and the motion for security for costs should have been brought to an associate judge. However, once I started the hearing, I became seized with them.

[15] In simple terms, the doctrine of res judicata, whether described as issue estoppel or cause of action estoppel, becomes engaged when the second proceeding raises issues or causes of action that were previously and finally determined by a court between the same parties: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 SCR 460, at para. 25. Rules 21.01(3)(d) and 25.11 of the Rules of Civil Procedure permit parties to bring motions to strike pleadings and other documents purporting to ask the court to reopen matters that have been decided. The word “vexatious” used in these rules comes from the common-law principle that a party should not be “vexed” by repeated litigation of the same issue.

[16] Paragraphs 6-9, if read as material pleadings, could be construed as attempts to re-litigate the previous oppression litigation. The plaintiff agreed but submitted that this was not his intention. Nevertheless, keeping these allegations in the statement of claim risks their taking on life as material facts under rule 25.06(1) of the Rules of Civil Procedure. To prevent the case from expanding beyond the libel claim starting at para. 10, or from otherwise losing its compass, I will order those paragraphs 6-9 be struck.

[17] Although clause 8(j) also referred to the “defamatory website,” it was not pleaded with sufficient particularity to qualify as a proper pleading of libel. A statement that the website contained lies is insufficient: Hooshangi v. Ruffolo, 2023 ONSC 4396, at para. 8. The clause adds nothing to the case and should therefore be struck out with the balance of the surrounding clauses in para. 8.

[18] I therefore order that paragraphs 6, 7, 8, and 9 of the statement of claim be struck out.

Which Test for Security for Costs?

[19] Given the clarification of the true intent of the plaintiff’s pleadings, the case is restricted to libel. The characterization of the action as a libel claim presents an interesting choice of procedure for security for costs. Rule 1.02(1)3 of the Rules of Civil Procedure states that the Rules of Civil Procedure “do not apply if a statute provides for a different procedure.” The Libel and Slander Act, R.S.O. 1990, c. L.12 (“the Act”), contains security for costs provisions. Does one of those operate instead of rule 56 of the Rules of Civil Procedure? There is no clear answer to that question.

[20] Section 12 of the Act applies to libel in a “broadcast,” whereas s. 18 applies to slander (defamation through unrecorded words). Since this action involves libel, the following provision should be considered:

Security for costs

12 (1) In an action for a libel in a newspaper or in a broadcast, the defendant may, at any time after the delivery of the statement of claim or the expiry of the time within which it should have been delivered, apply to the court for security for costs, upon notice and an affidavit by the defendant or the defendant’s agent showing the nature of the action and of the defence, that the plaintiff is not possessed of property sufficient to answer the costs of the action in case judgment is given in favour of the defendant, that the defendant has a good defence on the merits and that the statements complained of were made in good faith, or that the grounds of action are trivial or frivolous, and the court may make an order for the plaintiff to give security for costs, which shall be given in accordance with the practice in cases where a plaintiff resides out of Ontario, and the order is a stay of proceedings until the security is given. R.S.O. 1990, c. L.12, s. 12 (1).

[21] Section 1 of the Act defines “broadcast” in terms of the following:

means the dissemination of writing … of all kinds, intended to be received by the public either directly or through the medium of relay stations, by means of,

(a) any form of wireless radioelectric communication utilizing Hertzian waves, including radiotelegraph and radiotelephone, or

(b) cables, wires, fibre-optic linkages, or laser beams,

[22] Canadian courts have historically struggled to keep up with technological advances in the way the public partakes in news and entertainment. See Canadian Admiral Corporation Ltd. v. Rediffusion Inc., [1954] Ex CR 382, whether analogue cable television constituted broadcasting for the purposes of copyright infringement.

[23] Initially, this court applied the definition of “broadcast” in s. 1 of the Act to internet publications. However, the Court of Appeal has precluded Ontario courts from doing so until the issue has been determined in a trial in which evidence has been admitted on the subject: Bahlieda v. Santa, at para. 6; also see Vivo Canadian Inc. v. Geo TV, 2021 ONSC 3402, at para 50. More recently, the Court of Appeal allowed the application of the Act to online versions of printed newspapers, while carving out a distinction from its earlier decision in Bahlieda regarding material on websites as broadcasts: John v. Ballingall, 2017 ONCA 579, at paras 20 and 29. This reasoning therefore could be extended to radio-television diffusion streamed from websites. However, whether a “post” on an “Internet website” falls into either category remains an open question which this court is not permitted to answer without a trial record on the subject: Bahlieda, at para. 1.

[24] That leaves this motions court in the unenvious position of not knowing which procedure to apply, even though s. 12 of the Act is interlocutory in nature and will never have the benefit of a full trial record. Rule 1.02(1)3 of the Rules of Civil Procedure does not leave the choice to discretion, either. If s. 12 applies, rule 56 does not. Thus, choosing either will be the wrong decision even though there is a right answer. The logic is like Schrödinger's Cat, in which the observer of a box with a cat inside with poison does not know whether the animal is alive or dead but opening it will cause its death by spilling the poison.

[25] First, the provisions have different entry points and threshold requirements for the defendants to bring the motion:

a. Rule 56.03 of the Rules of Civil Procedure requires a defence before being permitted to move for security for costs. I do not consider the statement of defence delivered in this matter to include the corporation, because it was not delivered by a lawyer. However, s. 12 of the Act allows the motion to be brought without the necessity of a statement of defence.

b. Rule 56.01(1)(c) of the Rules of Civil Procedure allows unpaid costs of another proceeding to be a ground for bringing the motion, but s. 12 of the Act does not. Section 12 allows the court to consider lack of assets to be grounds for the motion, but in rule 56.01(1)(d) of the Rules of Civil Procedure the lack of assets is only relevant to a plaintiff corporation.

[26] Second, the provisions remedy issues relating to the plaintiff’s inability to post security and to the merits. The merits analysis arising from the courts’ interpretation of “as is just” in subrule 56.01(1) of the Rules of Civil Procedure has tended to include the strength of the case and the ability of the plaintiff to pay in a continuum. Here are the contrasting approaches:

a. If the plaintiff is a candidate for security for costs under rule 56 of the Rules of Civil Procedure, the plaintiff can counter with proof of impecuniosity. The plaintiff then need prove that the case is not devoid of merit, a very low threshold: Chachula v. Baillie, at para. 14. If there is no evidence of impecuniosity, the plaintiff must meet a higher test of showing a “good chance of success on the merits”: 2311888 Ontario Inc. v Ross, 2017 ONSC 1295, at para 17; and Bruno Appliance and Furniture, Inc. v. Cassels Brock & Blackwell LLP, 2012 ONSC 2197, at para. 16.

b. Section 12 of the Act arguably incorporates this analysis using the discretionary word, “may,” but the better interpretation appears to be that the defendant can make the case for ordering security by showing either a good defence and lack of malice or a lack of merit, without regard to the plaintiff’s inability to post security. This is not a shifting burden, but rather a choice of burdens for the moving defendant to meet. Thus, s. 12 appears to favour the plaintiff by not requiring proof of impecuniosity but keeping the burden on the defence to demonstrate the adequacy of its defence or the complete lack of merit of the plaintiff’s case.

[27] While the courts await a trial court to decide whether an informational web posting is a “broadcast,” I have decided to analyse the case based on both provisions, and to determine whether, with the particular facts and logic of this case, the results differ.

[28] The moving parties have established the threshold tests of unpaid costs awards under rule 56 of the Rules of Civil Procedure or the lack of assets test under s. 12 of the Act. They appear to have opened the door to an order for security for costs. However, the corporate defendant is not entitled to move for security for costs because its motion was not brought by a lawyer, and it cannot be represented by the individual defendants. This could be grounds to dismiss the motion, because the corporate defendant is the publisher of the libel.

[29] Proceeding, then, with the hobbled motion by two of the defendants, the next step would be to consider whether the plaintiff can avail himself of the impecuniosity response under rule 56 of the Rules of Civil Procedure. The plaintiff asked for leave to upload a copy of his Ontario Works statement, showing he is on state income support. I declined to allow him to do so, because in his materials he did not address this issue at all. Even self-represented parties must familiarize themselves with the issues. The Canadian Legal Information Institute, provides a complete layperson’s version of the Rules of Civil Procedure prepared by the University of Windsor Law School, including an excellent chapter on rule 56 and the case law on impecuniosity: 2021Docs 2049. I have therefore determined that he failed to establish that he is impecunious and able to avail himself of the very low standard on the merits analysis.

[30] As a practical matter, the logic of the motion boils down to a narrow set of standards. The motion under s. 12 of the Act stands or falls on the individual defendants’ ability to show a good defence and a good faith reason for publishing the libel, or that the action is trivial or frivolous. The motion under rule 56 of the Rules of Civil Procedure depends on the ability of the plaintiff to show he has a good case on the merits. Apart from the differing tactical onuses, the issue is essentially identical.

[31] The defamation pleaded at paragraph 10 consisted of two items on the same post on the website. The pleaded defence to both is justification, i.e., that the statements are true.

[32] There were competing pieces of evidence filed on the motion whether the Toronto Police was ever “after Julian Devante for fraud.” Even if it were true at the time, fairness would dictate that the defendants post a subsequent statement that they are no longer after him. The absence of a retraction or clarification gives the false impression that the plaintiff is some kind of fugitive. The statement therefore appears to be libelous.

[33] The website post attributing to Justice Newbould (now retired) use of the words “crook” and “fraudulently tried to sell technology that did not belong to him” referred to that retired judge’s decision, to which the site posted a link. I was unable to find those words in the learned judge’s decision. The parties could not locate the words in the transcript of the hearing. The affidavit of Wayne Berry, para. 16, stated that Justice Newbould made those comments off the record after the hearing.

[34] It is a basic judicial principle that the only opinion of a court that matters is the judgment and the words used to explain it. Judges will also say things during counsel’s submissions to ensure full debate. Attributing words allegedly stated off the record raises a host of issues, not the least of which is the problem of proof. Here, the libel is not that the defendants called Mr. Devante a “crook” and a fraudster, but rather their republication of an utterance by a judge of this court after the hearing had concluded.

[35] The common-law immunity of privilege accorded to statements in court only applies to open court: Hill v. Church of Scientology of Toronto, [1995] 2 SCR 1130, at para. 151. After a matter has been closed, it is generally considered closed until the next matter is called. It is therefore possible the judge’s off-the-record remarks after the hearing were not subject to the privilege. The judge, however, would have been protected by the constitutional and common-law immunity against suit: Ernst v. Alberta Energy Regulator, 2017 SCC 1, [2017] 1 SCR 3, at para 171. The defendant authors of a republication of the remarks does not, however, enjoy such immunity.

[36] Moreover, a report of judicial proceedings in open court must be without malice and be “fair and accurate”: Hill, at para. 150. Thus, the false publication that the plaintiff was found in a judicial decision to have been a “crook,” i.e. a criminal, appears very much to be a publication outside any scope of privilege afforded by the law of defamation.

[37] The moving parties contended that if one read the decision of Justice Newbould, one would readily conclude that the plaintiff was guilty of being a “crook” and a fraudster. Had the web posting been fairer and more accurate, the fact that readers might come to their own conclusions could afford a defence to the libel claim. Stating the facts and allowing readers to draw conclusions is the basic ethical principle the law of defamation upholds. Any publisher purporting to make up readers’ minds will do so at the peril of a defamation suit if the publication steps too far.

[38] Since I am not deciding the matter but only assessing the merits for the purpose of the motion, I need not explore every nook or cranny of this interesting issue. The defendants’ awkward attempt to justify the libel suggests that the defence is weak and likely difficult to prove.

[39] I conclude for the purposes of this motion that the plaintiff appears to have a good case of libel on the merits. Whether under rule 56 of the Rules of Civil Procedure or s. 12 of the Act, the analyses lead to the same conclusion. The motion for security for costs is therefore dismissed.

Costs

[40] Given the divided success in the motion, and the clear need to remove the unnecessary and arguably vexatious allegations from the plaintiff’s statement of claim, I award no costs of the motion.

Conclusion

[41] Paragraphs 6, 7, 8, and 9 of the statement of claim are hereby struck, without leave to amend.

[42] The motion for security for costs is dismissed.

[43] There shall be no costs of the motion.

Akazaki J. Date: June 19, 2024