Case comment on James Bay Resources Limited v. Mak Mera Nigeria Limited, 2025 ONCA 448
Can a corporation feel the sting of a defamatory statement? In short, no.
The law deems a corporation to be a "person" because it has the legal capacity (separate from its flesh-and-blood directors, officers, or shareholders) to take actions that only people are ordinarily permitted to take.1 Be that as it may, the Ontario Court of Appeal has reaffirmed that corporations – unlike actual people – cannot have feelings. For that reason, the amount in compensatory damages that corporations can recover in a defamation case is limited even if they do successfully establish liability.
The failed venture
In James Bay Resources, a Canadian company (James Bay) partnered with a Nigerian company (Mak Mera) to procure oil and gas contracts in Nigeria. Under this deal, Mak Mera would help James Bay find business opportunities and comply with Nigerian law, which requires foreign companies to partner with local companies to be eligible to participate in oil and gas extraction. This venture failed and resulted in no oil and gas projects for James Bay. Both parties had grievances: James Bay wanted to recover the money it had paid to Mak Mera on the grounds that the payments were conditional upon the success of James Bay's business ventures (which did not materialize), while Mak Mera felt betrayed by James Bay because the latter pursued an opportunity with Shell Corporation outside the partnership.
The defamation
Knowing that James Bay needed the Nigerian government's approval to proceed with the Shell deal, Mak Mara wrote two complaint letters to the government, copying Shell, (1) alleging that James Bay "defrauded [Mak Mera] by misrepresentations and deceptive conduct" and (2) requesting that the government suspend the award of the Shell contract to James Bay. The Nigerian government pre-empted James Bay's bid to the project, and James Bay eventually pulled out of the Nigerian market entirely.
The trial judge ruled that Mak Mera's statements in the letters were defamatory and awarded $200,000 in damages to James Bay.
Damages
At the Court of Appeal, Mak Mera did not contest the finding of liability for defamation. Since damages are presumed once defamation is established, it was common ground that the trial judge was obliged to order some non-zero sum to the plaintiff.
The focus of the appeal, then, was on whether the $200,000 award was warranted. The Court of Appeal found that the trial judge erred and lowered the damages to a nominal $1,000. This decision was premised largely on the idea that corporations have no feelings under the law.
The Court of Appeal found that there was no evidence of any actual reputational harm to James Bay, as there was nothing in the record to suggest that the letters were circulated beyond the Nigerian government and Shell. There was also no evidence that the letters in fact caused the Nigerian government to pre-empt James Bay's bid or that they caused James Bay's relationship breakdown with Shell. It was not open to the trial judge to, on the available record, conclude that "[t]here is no other explanation" for the Nigerian government's decision.
Whereas a human plaintiff can allege an injury to their feelings to justify a claim for damages beyond a nominal amount even without tangible evidence of harm, a corporation "can only be injured in its pocket". Corporate plaintiffs can tender proof of quantifiable losses, or even the existence of complaints, that arose as a result of the defamation as proof of a compensable injury, but there nevertheless needs to be some evidence that it suffered harm. Where a corporation cannot prove an injury to its pocket, a small amount is all that is required to soothe its nonexistent feelings. The Court of Appeal held that a court victory is sufficient vindication for a corporation, as it sets the record straight with respect to the defamatory statements.
For similar reasons, the Court of Appeal held that Mak Mera's refusal to apologize for its defamatory statements is not a valid reason for awarding higher damages. For corporations, apologies are only relevant to the calculation of damages to the extent that they stop the spread of harmful falsehoods, thus mitigating the effect of the defamation on the corporation's reputation (from a monetary perspective). By contrast, human plaintiffs may point to a lack of an apology in a claim for aggravated damages because the defendant's lack of remorse may be an additional source of hurt feelings on top of the defamation itself.
The Court of Appeal was silent on whether a defendant's refusal to apologize can be a factor in awarding a corporate plaintiff punitive damages, whose purpose is not to compensate but to punish the defendant for "malicious, oppressive, and high-handed" conduct.
It is also unclear whether the Court of Appeal's holding applies to closely held corporations, where the small size of the corporation makes it such that its reputation may be inextricably tied to the reputations of its individual directors, officers, or shareholders. The Alberta Court of Appeal in Thomas – although not in the context of a defamation case – suggests that closely held corporations should not be treated any differently than larger corporations in this respect, as "[t]o compensate a closely-held corporation for mental anguish suffered by its shareholders would represent a change or exception to the law that is not warranted."2
Implications on anti-SLAPP?
The Court of Appeal's holding in James Bay Resources seems to fit together uneasily with Ontario's legislative regime to combat strategic lawsuits against public participation ("SLAPP"). Section 137.1 of the Courts of Justice Act was enacted to allow defendants to dismiss, at an early stage, proceedings commenced for strategic reasons (that is, to limit expression on matters of public interest) rather than to pursue compensation for actual damages.
To dismiss a case under the anti-SLAPP law, the defendant must establish that the proceeding arises from an expression made by the defendant that relates to a matter of public interest, after which the onus shifts to the plaintiff to prove that:
- there are grounds to believe that
- the proceeding has substantial merit; and
- the defendant has no valid defence; and
- the harm suffered as a result of the defendant's expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs to the public interest in protecting that expression (the "public interest weighing exercise").3
Even if the plaintiff succeeds in establishing that there are grounds to believe that the proceeding has substantial merit and the defendant has no valid defence, the proceedings can still be dismissed if the public interest weighing exercise favours the defendant.
With respect to the public interest weighing exercise, the Supreme Court of Canada in Bent states, "the magnitude of the harm will be important in assessing whether the harm is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting the expression. General damages in the nominal sense will ordinarily not be sufficient for this purpose."4
In cases where the court finds that the impugned expression relates to a matter of public interest, the decision in James Bay Resources appears to pull the law in two directions.
On one hand, the decision, when read in conjunction with Bent, seems to suggest that corporate plaintiffs will likely not survive the public interest weighing exercise on an anti-SLAPP motion if they are unable to prove damages. To that effect, the Court of Appeal states, "In the case of a corporate plaintiff, absent proof of loss or impact, it is unlikely that substantial damages will be awarded."5
On the other hand, the Court of Appeal also states, "In the case of a corporate plaintiff, ... the judgment itself will often serve as a vindication of the plaintiff's rights."6 This holding, which appears to legitimate litigation for purposes other than the seeking of compensation, does not seem to be compatible with the anti-SLAPP test, which was designed to filter out claims – including meritorious ones – that are not substantiated with evidence of harm such that only claims with meaningful damages are "sufficiently serious" to proceed to trial.
Footnotes
1. Among other things, a corporation can sue and be sued, enter into contracts, and own property.
2. Thomas Management Limited v. Alberta (Minister of Environmental Protection), 2006 ABCA 303 at para 27.
3. Courts of Justice Act, RSO 1990, c C.43, s. 137.1 (3) and (4).
4. Bent v. Platnick, 2020 SCC 23 at para 144 (citations removed, emphasis added).
5. James Bay Resources Limited v. Mak Mera Nigeria Limited, 2025 ONCA 448 at para 123.
6. Ibid.
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