Court File and Parties

COURT FILE NO.: CV-15-540516 DATE: 20240209 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: 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 FLEMMING, JOEL GIROUARD, DAN WILCOCK, MIKE FABBRO, SANDI WRIGHT, JOHN DOES, JANE DOES and MARLENE CROUTEAU, Defendants

BEFORE: Cavanagh J.

COUNSEL: Young Park, for the Plaintiff (Responding Party) Wendy Wright, Kevin Diaz, Fozia Chaudary, and Sarah Mackenzie for the Defendants (Moving Parties) Canada Revenue Agency, Minister of Public Works and Government Services Canada, Attorney General of Canada and Mike Fabbro Sheldon Inkol for the Defendant (Moving Party) Better Business Bureau of Central Ontario Inc.

HEARD: In Writing

Costs Endorsement

[1] In a decision released on November 3, 2023, I granted motions brought pursuant to s. 137.1 of the Courts of Justice Act (“CJA”) by (i) Canada Revenue Agency, Minister of Public Works and Government Services Canada, Attorney General of Canada and Mike Fabbro (the “Crown Defendants”), and (ii) the Better Business Bureau of Central Ontario Inc. (“BBB”).

[2] This is my endorsement with respect to costs.

Costs of motion by Crown Defendants

[3] Section 137.1(7) of the CJA provides:

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.

[4] The Crown Defendants seek an order of costs on a full indemnity basis (i) of the motion, in the amount of $110,911.79, and (ii) of the action, in the amount of $160,166.53, for a total of $271,078.32.

[5] The Plaintiff, A&H Asset Auction Inc., submits that the Court should exercise discretion under s. 137.1(7) to displace the presumption of full indemnity costs and make an order for costs for the action and the motion on a partial indemnity basis fixed at $50,000, all inclusive, or, alternatively, that costs of the motion and action be fixed in the amount of $75,000 all inclusive.

[6] In Fortress Real Developments Inc. v. Rabidoux, 2018 ONCA 686, the Court of Appeal held that s. 137.1(7) creates a starting point for the motion judge’s determination of costs when the moving party has been successful in dismissing the action on a s. 137.1 motion. The Court of Appeal expressed the view that a motion judge, when deciding how he or she should exercise his or her discretion under s. 137.1(7), will be guided by the considerations that guide the exercise of discretion with respect to costs in other proceedings, including the factors in rule 57.01 of the Rules of Civil Procedure and the overriding objective that the award of costs be fair and reasonable.

[7] In Levant v. DeMelle, 2022 ONCA 79, the Court of Appeal for Ontario considered the features that will distinguish a case where an award of full indemnity costs is not appropriate in a particular case. Nordheimer J.A., writing for the Court, recognized that there will be many different factors that may impact on the exercise of discretion to depart from the presumption in s. 137.1(7). Nordheimer J.A. noted that the presence or absence of factors that might drive an award of costs on a higher scale in regular civil litigation may be relevant to the exercise of appropriateness discretion in these cases. Nordheimer J.A. turned to the cases at hand, addressed the indicia of a SLAPP lawsuit, and noted that where the indicia of a SLAPP lawsuit are present (three of four were present in Levant), the purpose behind the presumptive costs award, deterrence of such lawsuits, clearly applies.

[8] In Levant, at para. 82, the Court of Appeal confirmed that the indicia of a SLAPP suit include:

a. a history of the plaintiff using litigation or the threat of litigation to silence critics, b. a financial or power imbalance that strongly favours the plaintiff, c. a punitive or retributory purpose animating the plaintiff’s bringing of the claim, and d. minimal or nominal damages suffered by the plaintiff.

[9] The Crown Defendants submit that A&H made allegations of misfeasance against Michael Fabbro in his personal capacity despite having named the Attorney General of Canada as a co-defendant, and pleaded allegations regarding his conduct (that he disrupted its auctions) that were unsupported by evidence. In response, A&H submits that Mr. Fabbro was a necessary defendant who was represented by the lawyers for the Crown Defendants. I do not regard inclusion of Mr. Fabbro as a defendant or the pleaded allegations to rise to the level of conduct that deserves sanction through an award of elevated costs.

[10] There is evidence in the record of a document that was posted to the A&H website and produced in response to a request for an undertaking. This document is on the letterhead of A&H and is entitled “White Paper: Online Libel 15/10/13”. The White Paper describes steps taken by A&H in response to what the White Paper describes as falsehoods in online websites. The White Paper reads: ‘These so-called ‘scam’ sites are being sued for online libel. We will seek significant punitive damages. We will encourage the courts to make examples of such companies to help drive changing case law related to unethical internet behaviour”. The Crown Defendants refer to other parts of the White Paper in which A&H maintains that it will assert its legal rights and seek to recover costs in so doing.

[11] In my decision on the s. 137.1 motions, I addressed A&H’s evidence of damages and the expert evidence offered in support. I concluded that because of a factual assumption he was asked to make, the evidence of the expert witness 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 concluded that in the absence of independent expert evidence on the causal link, I am left with statements from representatives of A&H which are little more than bare assertions of harm.

[12] A&H submits that the statements in the White Paper to which the Crown Defendants refer about “scam sites” refers to statements made in websites owned by a foreign person who provided a forum for persons to publish anonymously and disclaim any responsibility for the contents. A&H denies that there is evidence of it having a history of using litigation or a threat of litigation to silence critics. A&H says that it is a small family run business and, in comparison, the Crown Defendants have unlimited resources. A&H submits that there is no evidence that it brought its action for a punitive or retributory purpose. A&H submits that it suffered significant damages including loss of sales which is shown by the fact that it is no longer in business.

[13] I am not satisfied that the indicia of a SLAPP suit have been shown to be present. I am not able to conclude that the purpose behind the presumptive costs award, deterrence of SLAPP lawsuits, clearly applies. I am not satisfied that, absent the presumptive award of full indemnity costs provided for in s. 137.1(7) of the CJA, the conduct of A&H in this litigation qualifies as reprehensible and rises to the level that justifies an award of costs on an elevated scale.

[14] When I consider the circumstances, I determine that costs should be awarded in favour of the Crown Defendants on a partial indemnity scale.

Is the amount of costs claimed by the Crown Defendants fair and reasonable?

[15] In Park Lawn Corporation v. Kahu Capital Partners Ltd., 2023 ONCA 129, Pepall J. wrote that a motion brought pursuant to s. 137.1 of the CJA is a screening procedure that is meant to be efficient and economical. Her Honour suggested that, as a guideline, the costs of such a motion should not generally exceed $50,000 on a full indemnity basis. Justice Pepall recognized that there will be exceptions and that motion judges always have the power to award less, more, or nothing, as they see fit in the circumstances of each case.

[16] In Boyer v. Callidus Capital Corporation, 2023 ONCA 311, the successful defendant by counterclaim on a motion to dismiss the counterclaim under s. 137.1 of the CJA claimed costs on a full indemnity basis of $273,111.22. The plaintiff by counterclaim submitted that this should be reduced to $90,000, and, in support of this submission, pointed to the decision in Park Lawn. The Court of Appeal for Ontario held that full indemnity costs should be awarded and that the amount claimed was appropriate in circumstances where the plaintiff by counterclaim claimed $150 million alleging a breach of fiduciary duty that was bald and unsubstantiated.

[17] In Canadian Frontline Nurses v. Canadian Nurses Association, 2023 ONSC 3529, the motion judge referred to Park Lawn and Callidus (as well as another decision of the Court of Appeal in The Catalyst Group Inc. v. West Face Capital Inc., 2023 ONCA 381 where awards of substantial costs on a full indemnity scale, well in excess of $50,000, were upheld). The motion judge held that given these decisions (which did not follow the guidance in Park Lawn), the principles that a lower court should follow when awarding costs of an unsuccessful motion under s. 137.1 of the Courts of Justice Act are unclear.

[18] Having regard to this jurisprudence, and the number and complexity of the issues raised on this motion, I do not accept the submission made by A&H that costs awarded to the Crown Defendants should be limited to $50,000.

[19] In the Amended Amended Claim, A&H claimed general damages in the amount of $12,000,000, special damages in the amount of $4.5 million, and $200,000 in punitive damages. The issues raised on the motion by the Crown Defendants involved several defences. The Crown Defendants relied on affidavits from two deponents. There were many exhibits to each affidavit. A&H responded with an evidentiary record of six volumes. Cross-examinations were held. The factual and legal issues raised were of moderate complexity.

[20] A&H submits that:

a. The number of hours spent for documentary disclosure (185 hours by two lawyers) is excessive where 890 documents were produced. The Crown Defendants respond that counsel reviewed close to 32,000 documents and, in this context, the number of hours spent is not unreasonable. b. The number of hours spent for preparation of pleadings (221 hours) should be reduced by $69,300. The Crown Defendants respond that the time spent reflects the complexity of the action, the number of causes of action alleged, and the fact that A&H amended its claim twice. c. Hours claimed for “File Management” (191 hours), without further particularity, should be disallowed. d. The time claimed for preparation for cross-examination, answering undertakings, research and drafting the factum, and preparation for the motion is excessive and should be reduced.

[21] A&H did not provide its own costs outline for this motion. In the absence of one, I am not able to assess the reasonableness of the costs claimed by the Crown Defendants in comparison to the costs of A&H. It has been held that in such circumstances, an attack on the quantum of costs “is no more than an attack in the air”: Risorto v. State Farm Mutual Automobile Insurance Co., at para. 10.

[22] I have reviewed the Costs Outline of the Crown Defendants. I would reduce the amount of costs allowed for File Management, in the absence of further particulars. Otherwise, I am satisfied that the claim for fees is fair and reasonable.

[23] I fix costs of the action to be paid by A&H to the Crown Defendants on a partial indemnity scale in the amount of $150,416 comprised of fees of 140,000 and disbursements of $10,416. I am satisfied that this amount is fair and reasonable and falls within a range of costs that A&H would reasonably expect to pay if it was unsuccessful on the motion and in the action.

Costs of motion by BBB

[24] BBB asks for costs of the action, including the motion, on a full indemnity basis in the amount of $127,885.59.

[25] BBB submits that there is nothing in its conduct that would defeat the presumption that costs should be awarded on a full indemnity scale. BBB submits that given the concession that the statements by BBB were published on an occasion of qualified privilege, A&H had a difficult onus to meet to show malice and it “lost the gamble”. BBB refers to its offer in the fall of 2021 to accept a discontinuance of the action without costs.

[26] I am not satisfied that the fact that A&H opposed the motion where there were risks of losing, or BBB’s willingness to agree to a discontinuance of the action without costs, justify an award of costs against A&H on an elevated scale. I adopt my reasons in respect of the claim for costs by the Crown Defendants. I determine that it is not appropriate to award costs to BBB on a full indemnity scale. I award costs to BBB on a partial indemnity scale.

[27] With respect to the amount claimed by BBB, A&H submits that the costs claimed are unfair, unreasonable, disproportionate and inconsistent with the reasonable expectations of A&H, the unsuccessful litigant. BBB replies that although it did not take the lead during cross-examination’s of the affiants for A&H, it had to review the evidence and prepare for the cross examinations fully. BBB submits that the time that it spent was reasonable and proportionate.

[28] I have reviewed BBB’s Bill of Costs. I am satisfied that the claim for fees on a partial indemnity scale of $72,157.94 is fair and reasonable in the circumstances. This amount falls within a range of fees that A&H would reasonably expect to pay if it was unsuccessful on the motion and in the action.

[29] I fix costs to be paid by A&H to BBB on a partial indemnity scale in the amount of $87,122.55 comprised of fees of $72,157.94, HST on fees of $9,380.53 and disbursements of $5,584.08.

Cavanagh J. Date: February 09, 2024