Canada: A Judicial "SLAPP" To The Drafters Of Ontario's Anti-SLAPP Legislation: A Case Comment On 1704604 Ontario Ltd. v. Pointes Protection Assn.

Last Updated: May 23 2016
Article by J. Paul R. Cassan and Tim J. Harmar

"...I was surprised to find this legislation buried in the Courts of Justice Act given the substantive nature of its provisions and the significance of the remedies provided in it. I would have thought that it would be stand-alone legislation or part of the legislation to which it is most applicable, such as the Libel and Slander Act, R.S.O. 1990 C.L. 12. I also found the provision of Section 137.1 of the Courts of Justice Act awkwardly drafted which is also surprising given the drastic effect of its provisions."1

In his statement above, Justice Gareau succinctly captured our thoughts and frustration with the wording of our shiny new Anti-SLAPP legislation in Ontario. What Justice Gareau did not mention is that the Legislature employed the interesting drafting strategy of peppering the legislation with terms and phrases not previously interpreted in Canadian law. Luckily, California and the Kiwi Courts could come to our rescue.

Facts:

Pointe Estates is a 91 lot proposed subdivision contemplated to include a manmade canal that would access the upper St. Mary's River in Sault Ste. Marie. It is precisely the kind of visionary initiative our city needs with the loss of our paper mill, the serious reduction in the fibre industry and the steep decline in the steel industry directly tied to the current oil crisis.

The legal process endured by the proponent seems to be taking longer than it would take to develop the property with a hand trowel.

In this case, the developer sought and, after production of subsequent reports and a brief jaunt to the Ontario Mining and Lands Commissioner, obtained approval from the Sault Ste. Marie Regional Conservation Authority.

Enter the Pointes Protection Association (PPA). This is a corporation whose members gathered to voice objection to the development. The PPA commenced a Judicial Review of the Conservation Authority approval. In advance of the Judicial Review hearing, the application was resolved by way of a written settlement agreement whereby the PPA and its executive committee personally agreed "not to take any further court proceeding seeking the same or similar relief," not to "knowingly make any false or untrue comments or statements to the media, electronic or print, in regards to the Pointe Estates development," and agreed that,

in any hearing or proceeding before the Ontario Municipal Board (OMB) or any other subsequent legal proceeding that they will not advance the position that the Resolutions passed by the SSMRCA on December 13th 2012 in regards to the Pointe Estates Development Under subsection 3(1) of Ontario Reg. 176/06 are illegal or invalid or contrary to the provisions of the Conservation Authorities Act R.S.O. 1990 c. C.27 and Ontario Reg. 176/06 being the Regulation of Development, interference with Wetlands and Alterations to Shorelines and Watercourses or that the SSMRCA exceeded its jurisdiction by passing the above noted Resolutions with no reasonable evidence to support its decision and considered factors extraneous to those set out in subsection 3(1) of Ont. Reg. 176/06.

Subsequent to signing, the agreement was enshrined in a Divisional Court Order dismissing the Judicial Review application "With Prejudice".

Municipal Council of the day rejected the developer's application regarding rezoning and an official plan amendment notwithstanding staff's recommendation of approval. Subsequently, the matter went before the Ontario Municipal Board ("OMB") and, on consent of the developer, the PPA was granted party status.

Without warning, and in what the developer sees as a substantial violation of the settlement agreement, the PPA called evidence dealing with issues that were squarely dealt with by the Conservation Authority.

As a result of the breach of settlement, the developer sued the signatories for breach of contract. Note that this was after the PPA participated before the Conservation Authority, the Mining and Lands Commissioner, Municipal Council, in the media and as a party at the OMB. Note as well that the developer did NOT sue, nor does it have a cause of action, against other objectors to the project who variously appeared before these bodies.

Issue:

This is the first decision in which the new anti-SLAPP provisions in the Courts of Justice Act has been before an Ontario court.

Section 137.1 prohibits proceedings against those who express themselves on matters of public interest. While the Ontario Superior Court of Justice was tasked with interpreting the section as whole, the more nuanced issued in this case concerned the extent to which parties can validly limit the extent of their participation through contract.

Legislation:

Section 137.1 came into force on November 3, 2015. It applies retroactively to any proceeding commenced after December 1.2 Its purposes are set out in subsection 137.1(1) as follows:

  1. to encourage individuals to express themselves on matters of public interest;
  2. to promote broad participation in debates on matters of public interest;
  3. to discourage the use of litigation as a means of unduly limiting expression on matters of public interest; and
  4. to reduce the risk that participation by the public in debates on matters of public interest will be hampered by fear of legal action.

Expression is broadly defined. Per subsection 137.1(2) "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".

Section 137.1 creates a two-part test to dismiss the proceeding. First, under subsection 137.1(3) the onus is on the moving party to satisfy the judge that the proceeding arises from an expression made by the moving party that relates to a matter of public interest. Second, if the moving is successful, the onus shifts to the respondent to satisfy the test set out in subsection 137.1(4) barring which the proceeding will be dismissed:

A judge shall not dismiss a proceeding under subsection (3) if the responding party satisfies the judge that,

  1. There are grounds to believe that,

    1. The proceeding has substantial merit, and
    2. The moving party has no valid defence in the proceeding; and
  2. 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.

Summary:

Justice Gareau concluded:

  1. An Ontario Municipal Board hearing is a public forum and expression on an environmental issue at such a hearing is "an expression made by a person that relates to a matter of public interest". Accordingly, the moving parties satisfied its onus under subsection 137.1(3); and
  2. The respondent also satisfied its onus under subsection 137.4 because:

    1. Its claim involved the sanctity of an agreement between parties which is a matter of importance involving consideration by the Court;
    2. Parties have the ability to waive or limit participatory rights by contract; and
    3. The finality of the agreement made between parties to be adjudicated outweighed the public interest in protecting the expression given in evidence before the OMB.

Decision:

Justice Gareau began his analysis by considering whether the moving parties satisfied their onus under the first part of the test. In so doing, Justice Gareau considered the meaning of both the term "expression" and the phrase "relates to a matter of public interest".

Justice Gareau found that the definition of the term "expression" was broad in scope. Accordingly, he determined that the statements made by Peter Gagnon (the PPA's President) in his testimony before the OMB were an "expression" and satisfied the first part of the test in subsection 137.1(3) being "an expression made by the person".3

Next, given that the phrase "relates to a matter of public interest" is not defined in section 137.1, Justice Gareau adopted the analogous explanation given to the phrase "matters of public interest" by the Supreme Court of Canada's in Grant v. Torstar Corp., [2009] 3 S.C.R. 640:4

[103] The authorities offer no single "test" for public interest, nor a static list of topics falling within the public interest (see, e.g. Gatley on Libel and Slander (11th ed. 2008), at p. 530). Guidance, however, may be found in the case on fair comment and s. 2(b) of the Charter.

[104] In London Artists, Ltd. v. Littler, [1969] 2 AII E.R. 193 (C.A.), speaking of the defence of fair comment, Lord Denning, M.R., described public interest broadly in terms of matters that may legitimately concern or interest people:

There is no definition in the books as to what is a matter of public interest. All we are given is a list of examples, coupled with the statement that it is for the judge and not for the jury. I would not myself confine it within narrow limits. Whenever a matter is such as to affect [page 686] people at large, so that they may be legitimately interested in, or concerned at, what is going on; or what may happen to them or to others; then it is a matter of public interest on which everyone is entitled to make fair comment. [p. 198]

[105] To be of public interest, the subject matter "must be shown to be one inviting public attention, or about which the public has some substantial concern because it affects the welfare of citizens, or one to which considerable public notoriety or controversy has attached"; Brown, vol. 2, at pp. 15-137 and 15-138. The case law on fair comment "is replete with successful fair comment defences on matters ranging from politics to restaurant and book reviews": Simpson v. Mair, 2004 BCSC 754, 31 B.C.L.R. (4th) 285, at para. 63, per Koenigsberg J. Public interest may be a function of the prominence of the person referred to in the communication, but mere curiosity or prurient interest is not enough. Some segment of the public must have a genuine stake in knowing about the matter published.

Based on the foregoing, Justice Gareau, considered the respondent's argument that the Court should adopt the reasons of Justice Del Frate on the motion for security for costs in Pointes Protection Association v. Sault Ste. Marie Region Conservation Authority.5. In that case, Justice Del Frate flatly rejected the moving parties' argument that they should be shielded from costs as a "public interest litigant". Justice Gareau considered Justice Del Frate's comments salient and significant, in particular his observations on PPA's small membership and on the limited repercussions the development will have for the general public.6 Nevertheless, having regard to the volume of media attention that the OMB proceeding garnered and comments to the contrary in the respondent's notion of motion for leave to appeal the OMB decision, Justice Gareau concluded:7

"that the evidence of Peter Gagnon at the hearing before the Ontario Municipal Board was "an expression made by a person that relates to a matter of public interest" and accordingly that the defendants as the moving party have satisfied the onus as set out in Section 137.1(3) of the Courts of Justice Act."

Justice Gareau, however, refused to dismiss the proceeding because he found the respondent met its onus under subsection 137.1(4).

First, Justice Gareau considered whether the proceeding had "substantial merit". Given that neither section 137.1 nor domestic jurisprudence defines the term "substantial" Justice Gareau had resort to dictionary definitions of the term before adopting the following statement of the High Court of New Zealand in Riveroaks Farm Limited v. Holland, H.C. Tauranga CIV-2010-470-584:8

The mere fact that an allegation or argument by the Tribunal will not itself expose the party concerned to liability for costs. In many cases a party will advance a claim or argument that requires careful consideration by the Tribunal, but which is ultimately rejected. Such a claim may properly be characterized as of substance, as opposed to lacking substance. In other words, they are "substantial". In my opinion, the legislature has used the expression "substantial merit" in s. 91(1)(b) in that sense, as denoting claims which do require serious consideration by the Tribunal.

With that statement in mind, Justice Gareau concluded that the respondent's claim did, in fact, have substantial merit. He held the claim involved the sanctity of agreements made between the parties, which is a serious matter to be considered by the Court.

Regarding the second part of the test the respondent must satisfy under subsection 137.1(4) Justice Gareau found that the moving parties' had "no valid defence in the proceeding". Although the moving parties raised the defence of absolute privilege on the motion, Justice Gareau concluded that "parties have the right to waive or limit rights aby way of separate contractual obligations".9 In so concluding, Justice Gareau adopted the following statement of the Supreme Court of the State of Minnesota in Middle-Snake-Tamarc Rivers Watershed District v. James Stengrim, (2010) 784 NW 2d 834, 839:10

"pre-existing legal relationships, such as those based on a settlement agreement where a party waives certain rights, may legitimately limit a party's right to public participation". The Minnesota court goes on to say later in the same paragraph, "In a situation such as the one present here, a district court has the authority to deny defendant's anti-SLAPP motion where a defendant has entered into a settlement agreement and contractually agreed not to hinder the establishment of a project, thereby waiving certain rights to public participation, but retaining others, and the court determines that there are genuine issues of material fact about the settlement agreement's effect on the defendants' public participation rights."

Lastly, Justice Gareau found that the harm the respondent's had suffered or were likely to suffer as a result of the moving parties' expression was sufficiently serious that the public interest in permitting the proceeding to continue outweighed the public interest in protecting that expression.

Justice Gareau explained that the respondent's action is about a breach of contract and is "also very much about how the court intends to treat agreement made between parties in an attempt to settle litigation".11 Because of the important public interest in policy interest in the settlement finality, Justice Gareau concluded that the litigation should continue.

The parties were ordered to bear their own costs of the motion. Justice Gareau was satisfied that the motion was somewhat novel in that it involved recently enacted provisions of the Courts of Justice Act and was not frivolous or meritless. It was, he stated "a motion that had to be brought and argued".12

Implications

Section 137.1 may be invoked in a variety of circumstances above and beyond those that would otherwise fall under the rubric of defamation claims. This is confirmed both by the legislation's broad definition of the term "expression" and the Court's expansive analysis of the phrase "relates matter of public interest".

Notwithstanding the relatively low bar set for the first part of the test, the Court made clear that the drastic remedy provided by section 137.1 may not be invoked to dismiss legitimate claims. That being said, the Court was faced with a unique fact pattern that may well not have been anticipated by the legislation's drafters. Nevertheless, the Court's detailed analysis of the two-part test under section 137.1 will doubtlessly inform the case law on this section as it develops. It is, therefore, an important decision of which all civil litigants and counsel should become aware.

Footnotes

1. 1704604 Ontario Ltd. v Pointes Protection Assn., 2016 ONSC 2884 at para 24. [1704604].

2. Courts of Justice Act, R.S.O. 1990, c. C.43 s 137.5.

3. 1704604, supra note 1 at para 40.

4. Ibid at para 32.

5. 2013 CarswellOnt 11542.

6. 1704604, supra note 1 at para 34.

7. Ibid at para 40.

8. Ibid at para 46

9. Ibid at para 48.

10. Ibid.

11. Ibid at para 53.

12. Ibid at para 58.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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